
 




 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-K
 
(Mark One) 
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended March 31, 2024
 
or
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period
from         to         
 
Commission file number 001-38474
 
Jerash Holdings (US), Inc.
(Exact name of registrant as specified in its charter)
 
  Delaware   81-4701719  (State or other jurisdiction of
incorporation or organization)   (I.R.S. Employer
Identification No.) 
 
277 Fairfield Road, Suite 338, Fairfield, New
Jersey 07004
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number, including
area code: (201) 285-7973
 
Securities registered pursuant to Section 12(b) of the Act:
 
  Title of each class   Trading Symbol(s)   Name of each exchange on which registered  Common Stock, par value $0.001 per share   JRSH   The Nasdaq Stock Market LLC 
 
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark whether the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
 
Indicate by check mark whether the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
 
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
 
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
 
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
  Large accelerated filer  ☐ Accelerated filer ☐  Non-accelerated filer  ☒ Smaller reporting company ☒      Emerging growth company ☐ 
 
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
 
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
 
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
 
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
 
The aggregate market value of the registrant’s
common stock, par value $0.001 per share, held by non-affiliates of the registrant, as computed by reference to the September 30, 2023
closing price reported by Nasdaq, was approximately $21,963,152. Shares of voting stock held by executive officers, directors, holders
owning more than 10% of the outstanding voting stock, and stockholders affiliated with a director or an executive officer have been excluded
from this calculation because such persons may be deemed to be affiliates. Exclusion of such shares should not be construed to indicate
that any of such persons possesses the power, direct or indirect, to control the Registrant, or that any such person is controlled by
or under common control with the Registrant. 
 
The number of the registrant’s shares of common stock, $0.001
par value per share, outstanding on June 27, 2024 was 12,294,840.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of the registrant’s 2024 Proxy
Statement (as defined below) are incorporated by reference in Part III of this Annual Report on Form 10-K.
 

 
 


 
 

 
Table of Contents
 


 
 
 
 
Page

PART I
 
 

Item 1. 
 
Business
 
1

Item 1A. 
 
Risk Factors
 
6

Item 1B. 
 
Unresolved Staff Comments
 
17

Item 1C.
 
Cybersecurity
 
17

Item 2.
 
Properties
 
18

Item 3.
 
Legal Proceedings
 
19

Item 4.
 
Mine Safety Disclosure
 
19

 
 
 
 
 

PART II
 
 

Item 5.
 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
20

Item 6.
 
[Reserved]
 
20

Item 7.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
20

Item 7A.
 
Quantitative and Qualitative Disclosures about Market Risk
 
26

Item 8.
 
Financial Statements and Supplementary Data
 
F-1

Item 9.
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
27

Item 9A.
 
Controls and Procedures
 
27

Item 9B.
 
Other Information
 
27

Item 9C.
 
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
 
27

 
 
 
 
 

PART III
 
 

Item 10.
 
Directors, Executive Officers and Corporate Governance
 
28

Item 11.
 
Executive Compensation
 
28

Item 12.
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
28

Item 13.
 
Certain Relationships and Related Transactions, and Director Independence
 
28

Item 14.
 
Principal Accounting Fees and Services
 
28

 
 
 
 
 

PART IV
 
 

Item 15.
 
Exhibit and Financial Statement Schedules
 
29

Item 16.
 
Form 10-K Summary
 
30

Signatures
 
31

 


i
 

 
PART I
 
Item 1. Business.
 
Overview
 
Jerash Holdings (US), Inc. (“Jerash Holdings”),
through its wholly owned operating subsidiaries (together the “Group,” “we,” “us,” or “our”),
is principally engaged in the manufacturing and exporting of customized, ready-made sportswear and outerwear from knitted fabric and personal
protective equipment (“PPE”) produced in its facilities in the Hashemite Kingdom of Jordan (“Jordan”). Our website
address is http://www.jerashholdings.com. Information available on our website is not a part of, and is not incorporated into, this Annual
Report on Form 10-K.
 
We are a manufacturer for many well-known brands
and retailers, such as VF Corporation (which owns brands such as The North Face, Timberland, and Vans), New Balance, G-III (owner or licensee
of brands such as Calvin Klein, Tommy Hilfiger, and DKNY), Acushnet (owner of brands such as Footjoy and Titleist), American Eagle, and
Skechers. Our production facilities comprise six factories and five warehouses and we currently employ approximately 5,400 people. The
total annual capacity at our facilities was approximately 14 million pieces (average for product categories including t-shirts, polo shirts,
pants, shorts, and jackets, and excluding PPE) as of March 31, 2024.
 
Organizational Structure
 
Jerash Holdings is a holding company incorporated
in Delaware in January 2016. As of the date of this annual report, Jerash Holdings has the following wholly owned subsidiaries: (i) Jerash
Garments and Fashions Manufacturing Co., Ltd. (“Jerash Garments”), an entity formed under the laws of Jordan, (ii) Treasure
Success International Limited (“Treasure Success”), an entity formed under the laws of Hong Kong Special Administrative Region
of the People’s Republic of China (“Hong Kong” or “HK”), (iii) Chinese Garments and Fashions Manufacturing
Co., Ltd. (“Chinese Garments”), an entity formed under the laws of Jordan and a wholly owned subsidiary of Jerash Garments,
(iv) Jerash for Industrial Embroidery Co., Ltd. (“Jerash Embroidery”), an entity formed under the laws of Jordan and a wholly
owned subsidiary of Jerash Garments, (v) Al-Mutafaweq Co. for Garments Manufacturing Ltd. (“Paramount”), an entity formed
under the laws of Jordan and a wholly owned subsidiary of Jerash Garments, (vi) Mustafa and Kamal Ashraf Trading Company (Jordan) for
the Manufacture of Ready-Make Clothes LLC (“MK Garments”), an entity formed under the laws of Jordan and a wholly owned subsidiary
of Jerash Garments; (vii) Jiangmen Treasure Success Business Consultancy Co., Ltd. (“Jiangmen Treasure Success”), an entity
incorporated under the laws of the People’s Republic of China (“China” or the “PRC”) and a wholly owned
subsidiary of Treasure Success, (viii) Jerash The First Medical Supplies Manufacturing Company Limited (“Jerash The First”),
an entity formed under the laws of Jordan and a wholly owned subsidiary of Jerash Garments, (ix) Jerash Supplies, LLC (“Jerash Supplies”),
an entity formed under the laws of the State of Delaware, (x) Kawkab Venus Dowalyah Lisenaet Albesah (“Kawkab Venus”), a limited
liability company established in Amman, Jordan, and (xi) Ever Winland Limited (“Ever Winland”), a limited liability company
organized in Hong Kong. As of the date of this annual report, Treasure Success owns 51% of the equity interests in J&B International
Limited (“J&B”), a company with limited liability incorporated under the laws of Hong Kong. P. T. Eratex (Hong Kong) Limited
(“Eratex”), a company formed in Hong Kong, owns the remaining 49%. To date, Treasure Success also owns 51% of the equity interests
in Jerash Newtech (Hong Kong) Holdings Limited (“Jerash Newtech”), a company incorporated under the laws of Hong Kong with
limited liability, and Newtech Textile (HK) Limited, a company incorporated in Hong Kong (“Newtech”), owns the remaining 49%.
 


1
 

 
This chart reflects our organizational structure as of the date of
this annual report:
 

 
Jerash Garments was established in Jordan on November
26, 2000 and operates out of our factory in Al Tajamouat Industrial City, a Development Zone in Amman, Jordan. Jerash Garments’
principal activities are to house management offices and to operate production lines and printing, sewing, ironing, packing, and quality
control units, as well as house our trims and finished products warehouses. We also operate our factory in Al-Hasa County (as discussed
below) under Jerash Garments.
 
Chinese Garments was established in Jordan on
June 13, 2013 and operates out of our factory in Al Tajamouat Industrial City. Chinese Garments’ principal activities are to house
administration, human resources, finance, and management offices and to operate additional production lines and sewing, ironing, and packing
units, as well as house our trims warehouse.
 
Jerash Embroidery was established in Jordan on
March 11, 2013 and operates out of our factory in Al Tajamouat Industrial City. Jerash Embroidery’s principal activities are to
perform the cutting and embroidery for our products.
 
Paramount was established in Jordan on October
24, 2004 and operates out of our factory in Al Tajamouat Industrial City. Paramount’s principal activities are to manufacture garments
per customer orders.
 
MK Garments was established in Jordan on January
23, 2003. On June 24, 2021, Jerash Garments and the sole shareholder of MK Garments entered into an agreement, pursuant to which Jerash
Garments acquired all of the outstanding stock of MK Garments. As of October 7, 2021, MK Garments became a subsidiary of Jerash Garments.
MK Garments operates out of our factory in Al Tajamouat Industrial City. MK Garments’ principal activities are to manufacture garments
per customer orders. This acquisition increased Jerash’s annual capacity from 12 million pieces to 14 million pieces. The new facilities
are an existing garment manufacturing operation adjacent to Jerash’s four largest manufacturing centers. Jerash assumed ownership
of all of the machinery and equipment owned by MK Garments through the acquisition.
 
Treasure Success was established in Hong Kong
on July 5, 2016 and operates in Hong Kong. Treasure Success’s primary activities are sales of garments and to employ sales and merchandising
staff and supporting personnel in Hong Kong to support the business of Jerash Garments and its subsidiaries.
 
Jiangmen Treasure Success was established in Jiangmen
City of Guangdong Province in the PRC on August 28, 2019 and operates in the PRC. Jiangmen Treasure Success’s primary activities
are to provide support in sales and marketing, sample development, merchandising, procurement, and other areas.
 
Jerash The First was established in Jordan on
July 6, 2020 and operate out of our factory in Al-Hasa County. Jerash The First’s principal activities are to manufacture PPE products.
 
Jerash Supplies was formed in Delaware on November
20, 2020. Jerash Supplies is engaged in the trading of PPE products.
 
Kawkab Venus was established in Amman, Jordan,
on January 15, 2015 with a declared capital of JOD 50,000. It holds land with factory premises, which are leased to MK Garments. On July
14, 2021, Jerash Garments and the sole shareholder of Kawkab Venus entered into an agreement, pursuant to which Jerash Garments acquired
all of the outstanding stock of Kawkab Venus. Apart from the land and factory premises, Kawkab Venus had no other significant assets or
liabilities and no operation activities or employees at the time of acquisition, so the acquisition was accounted for an asset acquisition.
As of August 21, 2022, Kawkab Venus became a subsidiary of Jerash Garments.
 


2
 

 
Ever Winland was organized in Hong Kong on December
3, 2020. It holds office premises, which are leased to Treasure Success. On June 22, 2022, Treasure Success and the shareholders of Ever
Winland entered into an agreement, pursuant to which Treasure Success acquired all of the outstanding stock of Ever Winland. Apart from
the office premises used by Treasure Success, Ever Winland had no other significant assets or liabilities and no operating activities
or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of August 29, 2022, Ever
Winland became a subsidiary of Treasure Success.
 
J&B is a joint venture company established
in Hong Kong on January 10, 2023. On March 20, 2023, Treasure Success and Eratex entered into a Joint Venture and Shareholders’
Agreement, pursuant to which Treasure Success acquired 51% of the equity interests in J&B on April 11, 2023. J&B engages in the
business of garment trading and manufacturing for orders from customers.
 
Jerash Newtech is a joint venture company established
in Hong Kong on November 3, 2023. On October 10, 2023, Treasure Success and Newtech entered into a Joint Venture and Shareholders’
Agreement. Pursuant to this agreement, both parties agreed to form a joint venture company in Hong Kong named Jerash Newtech, of which
Treasure Success holds 51% of the equity interests and Newtech holds 49%. Jerash Newtech engages in the business of supplying fiber and
fabric printed with Cooltrans technology, and may engage any other businesses in the future as both parties shall agree from time to time.
 
Products 
 
As a garment manufacturing group, we specialize
in manufacturing sportswear and outerwear. Our sportswear and outerwear product offering consists of jackets, polo shirts, t-shirts, pants,
and shorts. During fiscal 2024, our primary product offering was shorts, pants, and vests, which accounted for approximately 37% of our
total shipped pieces. Our primary product offering in the fiscal year ended March 31, 2023 was shorts, pants, and vests, which accounted
for approximately 49% of our total shipped pieces.
 
In response to high demand for PPE due to the
COVID-19 pandemic, we started manufacturing PPE in 2020. Our PPE product offering consists of branded (washable) and disposable face masks,
medical scrubs, protective coveralls, and surgical gowns. The sale of PPE products contributed an insignificant amount to our total revenue
in the fiscal years ended March 31, 2024 and 2023.
 
Manufacturing and Production
 
Our production facilities are located in Al Tajamouat
Industrial City and in Al-Hasa County in the Tafilah Governorate of Jordan.
 
Our production facilities in Al Tajamouat Industrial
City comprise five factories and five warehouses. Effective as of January 1, 2019, the government of the Hashemite Kingdom of Jordan converted
Al Tajamouat Industrial City into a Development Zone. Following this change, we continued to operate under benefits similar to the Qualifying
Industrial Zone designation, but were subject to a 10% corporate income tax plus a 1% social contribution. Starting from January 1, 2020,
the corporate income tax rate increased to 14% plus a 1% social contribution. On January 1, 2021, the corporate income tax rate increased
to 16% plus a 1% social contribution. On January 1, 2022, the corporate income tax rate increased to 18% or 20% plus a 1% social contribution.
On January 1, 2023, the corporate income tax rate increased to 19% or 20% plus a 1% social contribution. Effective January 1, 2024, we
have been subject to a 20% corporate income tax rate plus a 1% social contribution. Currently, the first factory, which we own, employs
approximately 1,500 people. Its primary functions are to house our management offices, as well as production lines, trims warehouse, and
printing, sewing, ironing, and packaging units. The second factory, which we lease, employs approximately 1,400 people. Its primary function
is to house our administrative and human resources personnel, merchandising and accounting departments, embroidery, printing, additional
production lines, trims and finished products warehouses, and sewing, ironing, packing and quality control units. The third factory, which
we lease, employs approximately 200 people. Its primary functions are to perform the cutting for our products. The fourth factory (under
Paramount), which we lease, currently employs approximately 1,200 people. Its primary functions are to house additional production lines.
The fifth factory (under MK Garments) currently employs approximately 600 people. Its primary function is to manufacture garments for
orders from customers.
 


3
 

 
Our production facility in Al-Hasa County in the
Tafilah Governorate of Jordan comprises a factory, which currently employs approximately 500 people and its primary functions are to manufacture
garment products per customer orders. We commenced the construction of this factory in 2018 and we started operations in November 2019.
This is a joint project with the Jordanian Ministry of Labor and the Jordanian Education and Training Department. According to our agreement
with these government agencies, we used this factory without paying rent through December 2022. We have continued to use the factory without
paying rent since January 2023 as new arrangements with the Jordanian Ministry of Labor are still being made. See “Item 2. Properties”
below for more information regarding this factory.
 
In 2015, we commenced a project to build a 4,800
square-foot workshop in the Tafilah Governorate of Jordan. The building is now used as a dormitory to house management and supervisory
staff who work at the factory in Al-Hasa County.
 
In April 2021, we commenced construction on a
195,000-square-foot housing facility for our multi-national workforce, situated on a 49,000-square-foot site owned by us, in Al Tajamouat
Industrial City. The construction is now complete and our workers have started moving in. To meet increasing demand, we are also finalizing
plans to construct an additional project on a nearby 133,000-square-foot parcel that we purchased in 2019 for $1.2 million. Two-thirds
of the land will be used for our seventh factory and the remaining one-third will be used for housing. As of the date of this annual report,
we are working with engineering consultants on the architectural design of the building, taking into account the potential business growth
bought about by the new business collaboration with Busana Apparel Group. We will carefully plan the construction investment to meet the
progress of business developments.
 
Total annual capacity at our existing facilities
was approximately 14 million pieces (average for product categories including t-shirts, polo shirts, pants, shorts, and jackets, and excluding
PPE) as of March 31, 2024. Our production flow begins in the cutting department of our factory. Then the product is sent to the embroidery
department for embroidery if applicable. From there, the product moves to be processed by the sewing unit, finishing department, quality
control, and finally the ironing and packing units.
 
We do not have long-term supply contracts or arrangements
with our suppliers. Most of our ultimate suppliers for raw materials, such as fabric, zippers, and labels, are designated by customers
and we purchase such materials on a purchase order basis.
 
Employees
 
As of March 31, 2024, we had an aggregate of approximately
5,600 employees located in Jordan, Hong Kong, the People’s Republic of China, and the United States of America, all of which are
full-time employees.
  
Customers
 
The following table outlines the dollar amount
and percentage of total sales to our customers for the fiscal years ended March 31, 2024 (“fiscal 2024”) and March 31, 2023
(“fiscal 2023”).
 


  
Fiscal 2024  
Fiscal 2023 

  
Sales  
   
Sales  
  

  
(USD, in thousands)  
%  
(USD, in thousands)  
% 

  
   
   
   
  

VF Corporation(1) 
$78,912  
 67.3% 
$82,661  
 59.9%

New Balance 
 13,931  
 11.9% 
 24,124  
 17.5%

G-III 
 5,773  
 4.9% 
 5,589  
 4.0%

Hugo Boss 
 2,920  
 2.5% 
 -  
 -%

Jiangsu Guotai Huasheng Industrial Co (HK)., Ltd 
 2,774  
 2.4% 
 9,454  
 6.8%

Easy Long International Limited 
 2,436  
 2.1% 
 -  
 -%

Acushnet 
 1,562  
 1.3% 
 -  
 -%

Others 
 8,879  
 7.6% 
 16,235  
 11.8%

Total 
$117,187  
 100.0% 
$138,063  
 100.0%

 


(1)
Most of our products are sold under The North Face, Timberland, and Vans brands owned by VF Corporation.

 


4
 

 
In fiscal 2024 and 2023, we depended on a few
key customers for our sales, and most of our sales in fiscal 2024 and 2023 were to one customer, VF Corporation.
 
We started producing garments for VF Corporation
in 2012. Most of the products we manufacture are sold under The North Face, Timberland, and Vans brands which are owned by VF Corporation.
Currently, we manufacture primarily outerwear for The North Face. Approximately 67% and 60% of our sales in fiscal 2024 and 2023 were
derived from the sale of manufactured products to VF Corporation, respectively. We are not party to any long-term contracts with VF Corporation
or our other customers, and our sales arrangements with our customers do not have minimum purchase requirements. As is common in our industry,
VF Corporation and our other customers place purchase orders with us after we complete detailed sample development and approval processes
that we and our customers have agreed upon for their purchase of the relevant manufactured garments. It is through the sample development
and approval processes that we and VF Corporation and our other customers agree on the purchase and manufacture of the garments. For fiscal
2024, VF Corporation issued approximately 3,400 purchase orders to us in amounts ranging from approximately $7 to $268,000. For fiscal
2023, VF Corporation issued approximately 10,500 purchase orders to us in amounts ranging from approximately $6 to $372,000.
 
Our customers are in the retail industry, which
is subject to substantial cyclical variations. Consequently, there can be no assurance that sales to current customers will continue at
the current rate or at all. In addition, our annual and quarterly results may vary, which may cause our profits and the market price of
our common stock to decline.
 
We continue to seek to expand and strengthen our
relationship with our current customers and other brand names. However, we cannot assure you that these brands will continue to buy our
products in the same volumes or on the same terms as they did in the past or that we will be successful in expanding our relationship
with other brand names.
 
Competition
 
The markets for the manufacturing of sportswear
and outerwear are highly competitive. The competition in those markets is focused primarily on the price and quality of the product and
the level of customer service. Our products compete with products of other apparel manufacturers in Asia, Israel, Europe, the United States,
and South and Central America.
 
Competition with other manufacturers in the clothing
industry focuses on reducing production costs, reducing supply lead time, design, product quality, and efficiency of supply to the customer.
Since production costs depend to a large extent on labor costs, in recent years most production in the industry has been moved to countries
where labor costs are low. Some of our competitors have lower cost bases, longer operating histories, larger customer bases, and other
advantages over us which allow them to compete with us. As described in more detail under “—Conditions in Jordan”
below, we are able to sell our products manufactured at our facilities in Jordan to the United States free from customs duties and import
quotas under certain conditions. These favorable terms enable us to remain competitive on the basis of price. According to the Association
Agreement between the European Union (the “EU”) and Jordan, which came into force in May 2002, and the joint initiative on
rules of origin reviewed and improved in December 2018 by the EU and Jordan, goods manufactured by us in Jordan that are subsequently
shipped to EU countries are shipped free from customs duties.
 
Conditions in Jordan
 
Our manufacturing facilities are located in Jordan.
Accordingly, we are directly affected by political, security, and economic conditions in Jordan.
 
From time to time, Jordan has experienced instances
of civil unrest, terrorism, and hostilities among neighboring countries, including Syria and Israel. A peace agreement between Israel
and Jordan was signed in 1994. Terrorist attacks, military activity, rioting, or civil or political unrest in the future could influence
the Jordanian economy and our operations by disrupting operations and communications and making travel within Jordan more difficult and
less desirable. Political or social tensions also could create a greater perception that investments in companies with Jordanian operations
involve a high degree of risk, which could adversely affect the market and price for our common stock. Furthermore, the escalation of
conflicts such as Russia-Ukraine and Israel-Hamas may increase geopolitical tensions globally. These political or social tensions could
disrupt international trade, industrial supply chains, and transportation, leading to market price volatility, and may adversely affect
our business, increase operational costs, and limit our ability to secure foreign financing for our operations and capital expenditures.
See “Item 1A. Risk Factors—Risks Related to Operations in Jordan—Our operations in Jordan may be adversely affected
by social and political uncertainties or change, military actions, health-related risks, acts of terrorism or other geopolitical instability.” 
 


5
 

 
Jordan is a constitutional monarchy, but the King
holds wide executive and legislative powers. The ruling family has taken initiatives that support the economic growth of the country.
However, there is no assurance that such initiatives will be successful or will continue. The rate of economic liberalization could change,
and specific laws and policies affecting manufacturing companies, foreign investments, currency exchange rates, and other matters affecting
investments in Jordan could change as well.
  
Trade Agreements
 
Because of the United States-Jordan Free Trade
Agreement, which came into force on December 17, 2001, and was implemented fully on January 1, 2010, and the Association Agreement between
the EU and Jordan, which came into force in May 2002, we are able to sell our products manufactured at our facilities in Jordan to the
U.S. free from customs duties and import quotas under certain conditions and to EU countries free from customs duties.
 
Income/Sales Tax Incentives
  
Effective January 1, 2019, Jordan’s government
converted the geographical area where Jerash Garments and its subsidiaries are located from a Free Zone to a Development Zone. Development
Zones are industrial parks that house manufacturing operations in Jordan. In accordance with applicable law, Jerash Garments and its subsidiaries
began paying corporate income tax in Jordan at a rate of 10% plus 1% social contribution. Starting from January 1, 2020, the corporate
income tax rate in Jordan increased to 14% plus 1% social contribution. Effective January 1, 2021, this rate increased to 16% plus 1%
social contribution. On January 1, 2022, this rate further increased to 18% or 20% plus 1% social contribution. On January 1, 2023, this
rate further increased to 19% or 20% plus a 1% social contribution. Effective January 1, 2024, the income tax rate further increased to
20%, plus a 1% social contribution. For more information, see “Note 2—Summary of Significant Accounting Policies—Income
and Sales Taxes.”
 
In addition, Jerash Garments and its subsidiaries
are subject to local sales tax of 16%. However, Jerash Garments was granted a sales tax exemption from the Jordanian Investment Commission
for the period June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. This exemption was
extended to February 5, 2025.
 
Government Regulation
 
Our manufacturing and other facilities in Jordan
and our subsidiaries outside of Jordan are subject to various local regulations relating to the maintenance of safe working conditions
and manufacturing practices. Management believes that we are currently in compliance in all material respects with all such regulations.
We are not subject to governmental approval of our products or manufacturing process.
 
Item 1A. Risk Factors.
 
The following are factors that could have a significant
impact on our operations and financial results and could cause actual results or outcomes to differ materially from those discussed in
any forward-looking statements.
 
Risks Related to Our Business and Our Industry
 
We rely on one key customer for most of
our revenue. We cannot assure you that this customer or any other customer will continue to buy our products in the same volumes or on
the same terms.
 
Our sales to VF Corporation (which owns brands
such as The North Face, Timberland, and Vans), directly and indirectly, accounted for approximately 67% and 60% of our total sales in
fiscal 2024 and 2023, respectively. From an accounting perspective, we are considered the principal in our arrangement with VF Corporation.
We bear the inventory risk before the specified goods are transferred to a customer, and we have the right to determine the price and
to change our product during the sample development process with customers in which we determine factors including material usage and
manufacturing costs before confirming orders. Therefore, we present the sales and related manufacturing activities on a gross basis.
  
We are not party to any long-term contracts with
VF Corporation or our other customers, and our sales arrangements with our customers do not have minimum purchase requirements. As is
common in our industry, VF Corporation and our other customers place purchase orders with us after we complete detailed sample development
and approval processes. It is through these sample development and approval processes that we and VF Corporation agree on the purchase
and manufacture of the garments in question. From April 1, 2022 to March 31, 2023, VF Corporation issued approximately 10,500 purchase
orders to us in amounts ranging from approximately $6 to $372,000. In fiscal 2024, VF Corporation issued approximately 3,400 purchase
orders to us in amounts ranging from approximately $7 to $268,000.
 


6
 

 
We cannot assure you that our customers will continue
to buy our products at all or in the same volumes or on the same terms as they have in the past. The failure of VF Corporation to continue
to buy our products in the same volumes and on the same terms as in the past may significantly reduce our sales and our earnings.
 
A material decrease in the quantity of sales made
to our principal customers, a material adverse change in the terms of such sales or a material adverse change in the financial condition
of our principal customers could significantly reduce our sales and our earnings.
 
We cannot assure you that VF Corporation will
continue to purchase our merchandise at the same historical rate, or at all, in the future, or that we will be able to attract new customers.
In addition, because of our reliance on VF Corporation as our key customer and their bargaining power with us, VF Corporation has the
ability to exert significant control over our business decisions, including prices.
 
Any adverse change in our relationship with
VF Corporation and its owned brands, or with their strategies or reputation, would have a material adverse effect on our results of operations.
 
Most of our products are sold under The North
Face, Timberland, and Vans brands, which are owned by VF Corporation. Any adverse change in our relationship with VF Corporation would
have a material adverse effect on our results of operations. In addition, our sales of those products could be materially and adversely
affected if the image, reputation, or popularity of either VF Corporation, The North Face, Timberland, or Vans were to be negatively impacted.
 
If we lose our key customer and are unable
to attract new customers, then our business, results of operations, and financial condition would be adversely affected.
 
If our key customer, VF Corporation, fails to
purchase our merchandise at the same historical rate, or at all, we will need to attract new customers and we cannot assure you that we
will be able to do so. We do not currently invest significant resources in marketing our products, and we cannot assure you that any new
investments in sales and marketing will lead to the acquisition of additional customers or increased sales or profitability consistent
with prior periods. If we are unable to attract new customers or customers that generate comparable profit margins to VF Corporation,
then our results of operations and financial condition could be materially and adversely affected.
 
If we lose our larger brand name customers,
or the customers fail to purchase our products at anticipated levels, our sales and operating results will be adversely affected.
 
Our results of operations depend to a significant
extent upon the commercial success of our larger brand name customers. If we lose these customers, these customers fail to purchase our
products at anticipated levels, or our relationships with these customers or the brands and retailers they serve diminishes, it may have
an adverse effect on our results and we may lose a primary source of revenue. In addition, we may not be able to recoup development and
inventory costs associated with these customers and we may not be able to collect our receivables from them, which would negatively impact
our financial condition and results of operations.
 
If the market share of our customers declines,
our sales and earnings may decline.
 
Our sales can be adversely affected in the event
that our direct and indirect customers do not successfully compete in the markets in which they operate. In the event that the sales of
one of our major customers decline for any reason, regardless of whether it is related to us or to our products, our sales to that customer
may also decline, which could reduce our overall sales and our earnings.
 


7
 

 
A natural disaster, catastrophe, pandemic,
or other unexpected events could adversely affect our financial conditions and business operations.
 
The occurrence of one or more unexpected events,
including war, acts of terrorism or violence, civil unrest, epidemics or pandemics, fires, tornadoes, hurricanes, earthquakes, floods,
and other forms of severe weather in the countries or regions in which we do business could adversely affect our operations and financial
performance.
 
In December 2019, COVID-19 was first identified
in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic—the
first pandemic caused by a coronavirus. The outbreak has reached more than 160 countries, including Jordan and the United States, resulting
in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control
the spread of the virus.
 
The COVID-19 pandemic did not materially adversely
affect our business operations and condition and operating results for fiscal 2023 and 2024. The Company currently expects that its operation
results for the fiscal year ending March 31, 2025 would not be impacted by the COVID-19 pandemic. However, in the event of a resurgence
of COVID-19 cases or a global outbreak of a similar pandemic, the Company's business could be negatively impacted if the U.S. government
or the Jordan government imposes new restrictions to curb the spread.
 
We may require additional financing to fund
our operations and capital expenditures.
 
As of March 31, 2024, we had cash and cash equivalents
of approximately $12.4 million and restricted cash of approximately $1.6 million. There can be no assurance that our available cash, together
with resources from our operations, will be sufficient to fund our operations and capital expenditures. In addition, our cash position
may decline in the future, and we may not be successful in maintaining an adequate level of cash resources.
 
Pursuant to the DBS facility letter dated January
12, 2022, DBS Bank (Hong Kong) Limited (“DBSHK”) provided a bank facility of up to $5.0 million to Treasure Success, which
was amended pursuant to a facility letter dated January 4, 2024. Pursuant to the amended agreement, DBSHK agreed to finance cargo receipt,
trust receipt, account payable financing, and certain type of import and export invoice financing up to an aggregate of $5.0 million,
with certain financial covenants. The DBSHK facility bears interest at 1.5% per annum over Hong Kong Interbank Offered Rate (“HIBOR”)
for HKD bills and 1.1% to 1.3% per annum over DBSHK’s cost of funds for foreign currency bills. The facility is guaranteed by Jerash
Holdings and became available to the Company on June 17, 2022.
 
In addition, we may be required to seek additional
debt or equity financing in order to support our growing operations. We may not be able to obtain additional financing on satisfactory
terms, or at all, and any new equity financing could have a substantial dilutive effect on our existing stockholders. If we cannot obtain
additional financing, we may not be able to achieve our desired sales growth, and our results of operations would be negatively affected.
 
We may have conflicts of interest with our
affiliates and related parties, and in the past we have engaged in transactions and entered into agreements with affiliates that were
not negotiated at arms’ length.
 
We have engaged, and may in the future engage,
in transactions with affiliates and other related parties. These transactions may not have been, and may not be, on terms as favorable
to us as they could have been if obtained from non-affiliated persons. While an effort has been made and will continue to be made to obtain
services from affiliated persons and other related parties at rates and on terms as favorable as would be charged by others, there will
always be an inherent conflict of interest between our interests and those of our affiliates and related parties. Through his wholly owned
entity Merlotte Enterprise Limited, Mr. Choi, our chairman, chief executive officer, president, treasurer, and a significant stockholder,
has an indirect ownership interest in Jiangmen V-Apparel Manufacturing Limited, with which we have entered into, or in the future may
enter into, agreements or arrangements. See also “Note 11—Related Party Transactions.” If we engage in related party
transactions on unfavorable terms, our operating results will be negatively impacted.
 


8
 

 
We are dependent on a product segment comprised
of a limited number of products.
 
Presently, we generate revenue primarily from
manufacturing and exporting sportswear and outerwear. A shift in demand from such products may reduce the growth of new business for our
products, and reduce existing business in those products. If demand in sportswear and outerwear were to decline, we may endeavor to expand
or transition our product offerings to other segments of the clothing retail industry. There can be no assurance that we would be able
to successfully make such an expansion or transition, or that our sales and margins would not decline in the event we made such an expansion
or transition.
 
Our revenue and cash requirements are affected
by the seasonal nature of our business.
 
A significant portion of our revenue is received
during the first six months of our fiscal year, or from April through September. A majority of our VF Corporation orders are derived from
winter season fashions, the sales of which occur in the spring and summer and are merchandized by VF Corporation during the autumn months
(September through November). As such, the second half of our fiscal year reflect lower sales in anticipation of the spring and summer
seasons. In addition, due to the nature of our relationships with customers and our use of purchase orders to conduct our business, our
revenue may vary from period to period.
 
Changes in our product mix and the geographic
destination of our products or source of our supplies may impact our cost of goods sold, net income, and financial position.
 
From time to time, we experience changes in the
product mix and the geographic destination of our products. To the extent our product mix shifts from higher revenue items, such as jackets,
to lower revenue items, such as pants, our cost of goods sold as a percentage of gross revenue will likely increase. In addition, if we
sell a higher proportion of products in geographic regions where we do not benefit from free trade agreements or tax exemptions, our gross
margins will fall. If we are unable to sustain consistent product mix and geographic destinations for our products, we could experience
negative impacts to our financial condition and results of operations.
 
Our direct and indirect customers are in
the clothing retail industry, which is subject to substantial cyclical variations and could have a material adverse effect on our results
of operations.
 
Our direct and indirect customers are in the clothing
retail industry, which is subject to substantial cyclical variations and is strongly affected by any downturn or slowdown in the general
economy. Factors in the clothing retail industry that may influence our operating results from quarter to quarter include:
 

●the volume and timing of customer
orders we receive during the quarter;

 


 
●
the timing and magnitude of our customers’ marketing campaigns;

 


 
●
the loss or addition of a major customer or of a major retailer nomination;

 


 
●
the availability and pricing of materials for our products;

 


 
●
the increased expenses incurred in connection with introducing new products;

 


 
●
currency fluctuations;

 


 
●
political factors that may affect the expected flow of commerce; and

 


 
●
delays caused by third parties.

 


9
 

 
In addition, uncertainty over future economic
prospects could have a material adverse effect on our results of operations. Many factors affect the level of consumer spending in the
clothing retail industry, including, among others:
 


 
●
general business conditions;

 


 
●
interest rates;

 


 
●
the availability of consumer credit;

 


 
●
taxation; and

 


 
●
consumer confidence in future economic conditions.

 
Consumer purchases of discretionary items, including
our products, may decline during recessionary periods and also may decline at other times when disposable income is lower. Consequently,
our customers may have larger inventories of our products than expected, and to compensate for any downturn they may reduce the size of
their orders, change the payment terms, limit their purchases to a lower price range, and try to change their purchase terms, all of which
may have a material adverse effect on our financial condition and results of operations.
 
The clothing retail industry is subject
to changes in fashion preferences. If our customers misjudge a fashion trend or the price which consumers are willing to pay for our products
decreases, our revenue could be adversely affected.
 
The clothing retail industry is subject to changes
in fashion preferences. We design and manufacture products based on our customers’ judgment as to what products will appeal to consumers
and what price consumers would be willing to pay for our products. Our customers may not be successful in accurately anticipating consumer
preferences and the prices that consumers would be willing to pay for our products. Our revenue will be reduced if our customers are not
successful, particularly if our customers reduce the volume of their purchases from us or require us to reduce the prices at which we
sell our products.
 
If we experience product quality or late
delivery problems, or if we experience financial problems, our business will be negatively affected.
 
We may from time to time experience difficulties
in making timely delivery of products of acceptable quality. Such difficulties may result in cancellation of orders, customer refusal
to accept deliveries, or reductions in purchase prices, any of which could have a material adverse effect on our financial condition and
results of operations. There can be no assurance that we will not experience difficulties with manufacturing our products.
 
We face intense competition in the worldwide
apparel manufacturing industry.
 
We compete directly with a number of manufacturers
of sportswear and outerwear. Some of these manufacturers have lower cost bases, longer operating histories, larger customer bases, greater
geographical proximity to customers, or greater financial and marketing resources than we do. Increased competition, direct or indirect,
could reduce our revenue and profitability through pricing pressure, loss of market share, and other factors. We cannot assure you that
we will be able to compete successfully with existing or new competitors, as the market for our products evolves and the level of competition
increases. We believe that our business will depend upon our ability to provide apparel products of good quality and meeting our customers’
pricing and delivery requirements, and our ability to maintain relationships with our major customers. There can be no assurance that
we will be successful in this regard.
 
We have entered into joint ventures with
third parties, and we may continue to do so in the future. This may subject us to various risks, including limited decision-making authority,
reliance on our joint venture partners' financial condition, the risk of disputes with our joint venture partners, and the risk of failing
to achieve profitability through such business.
 
As of the date of this annual report, we have
entered into two joint ventures with third parties. Please refer to “Item
1. Business—Organizational structure” for more information. Once we enter into any joint ventures, we will have limited decision-making
authority and we may face the risk of disputes with our joint venture partners. This includes potential deadlocks in making major decisions
and restrictions on our ability to exit the joint venture. Any disputes that arise between us and any of our joint venture partners may
result in litigation or arbitration. We may also face risks associated with the financial condition of our joint venture partners, including
the risk of bankruptcy and/or failure to fund their share of required capital contributions. As a result, we may be exposed to liabilities
that exceed our share of any joint venture. Our joint venture partners may also have business interests or goals that are inconsistent
with ours and may be able to take actions contrary to our policies or objectives. In specific circumstances, we may be liable for the
actions of any joint venture partners. Any of these situations may have a material adverse effect on our business, financial condition,
and results of operations.
 


10
 

 
Furthermore, we cannot assure that we may succeed
in doing business through these two joint ventures or any future joint ventures. If the two joint ventures do not achieve expected levels
of production or profitability, we will not be able to adequately manage our growth following the establishment of such business, and
our results of operations and financial condition would be adversely affected.
 
Our results of operations are subject to fluctuations in currency
exchange rates.
 
Exchange rate fluctuations between the U.S. dollar
and Jordanian Dinar (“JOD”), Hong Kong dollar, or Chinese Yuan (“CNY”), as well as inflation in Jordan, Hong Kong,
or the PRC, may negatively affect our earnings. A substantial majority of our revenue and a substantial portion of our expenses are denominated
in U.S. dollars. However, a significant portion of the expenses associated with our Jordanian, Hong Kong, or PRC operations, including
personnel and facilities-related expenses, are incurred in JOD, Hong Kong dollars, or CNY, respectively. Consequently, inflation in Jordan,
Hong Kong, or the PRC will have the effect of increasing the dollar cost of our operations in Jordan, Hong Kong, or the PRC, respectively,
unless it is offset on a timely basis by a devaluation of JOD, Hong Kong dollar, or CNY, as applicable, relative to the U.S. dollar. We
cannot predict any future trends in the rate of inflation in Jordan, Hong Kong, or the PRC or the rate of devaluation of JOD, Hong Kong
dollar, or CNY, as applicable, against the U.S. dollar. In addition, we are exposed to the risk of fluctuation in the value of JOD, Hong
Kong dollar, and CNY vis-a-vis the U.S. dollar. There can be no assurance that JOD or Hong Kong dollar will remain effectively pegged
to the U.S. dollar. Any significant appreciation of JOD, Hong Kong dollar, or CNY against the U.S. dollar would cause an increase in our
JOD, Hong Kong dollar, or CNY expenses, as applicable, as recorded in our U.S. dollar denominated financial reports, even though the expenses
denominated in JOD, Hong Kong dollars, or CNY, as applicable, will remain unchanged. In addition, exchange rate fluctuations in currency
exchange rates in countries other than Jordan where we operate and do business may also negatively affect our earnings.
 
We are subject to the risks of doing business
abroad.
 
Almost all of our products are manufactured outside
the United States, at our subsidiaries’ production facilities in Jordan. Foreign manufacturing is subject to a number of risks,
including work stoppages, transportation delays and interruptions, political instability, foreign currency fluctuations, economic disruptions,
expropriation, nationalization, the imposition of tariffs and import and export controls, changes in governmental policies (including
U.S. policies towards Jordan), and other factors, which could have an adverse effect on our business. In addition, we may be subject to
risks associated with the availability of and time required for the transportation of products from foreign countries. The occurrence
of certain of these factors may delay or prevent the delivery of goods ordered by customers, and such delay or inability to meet delivery
requirements would have a severe adverse impact on our results of operations and could have an adverse effect on our relationships with
our customers.
 
Our ability to benefit from the lower labor costs
in Jordan will depend on the political, social, and economic stability of Jordan and in the Middle East in general. We cannot assure you
that the political, economic, or social situation in Jordan or in the Middle East in general will not have a material adverse effect on
our operations, especially in light of the potential for hostilities in the Middle East. See “—Risks Related to Operations
in Jordan—Our operations in Jordan may be adversely affected by social and political uncertainties or change, military actions,
health-related risks, acts of terrorism or other geopolitical instability.” The success of the production facilities also will depend
on the quality of the workmanship of laborers and our ability to maintain good relations with such laborers in these countries. We cannot
guarantee that our operations in Jordan or any new locations outside of Jordan will be cost-efficient or successful.
 
Our business could suffer if we violate
labor laws or fail to conform to generally accepted labor standards or the ethical standards of our customers.
 
We are subject to labor laws issued by the Jordanian
Ministry of Labor for our facilities in Jordan. In addition, many of our customers require their manufacturing suppliers to meet their
standards for working conditions and other matters. If we violate applicable labor laws or generally accepted labor standards or the ethical
standards of our customers by, for example, using forced or indentured labor or child labor, failing to pay compensation in accordance
with local law, failing to operate our factories in compliance with local safety regulations, or diverging from other labor practices
generally accepted as ethical, we could suffer a loss of sales or customers. In addition, such actions could result in negative publicity
and may damage our reputation and discourage retail customers and consumers from buying our products.
 


11
 

 
Our products may not comply with various
industry and governmental regulations and our customers may incur losses in their products or operations as a consequence of our non-compliance.
 
Our products are produced under strict supervision
and controls to ensure that all materials and manufacturing processes comply with the industry and governmental regulations governing
the markets in which these products are sold. However, if our controls fail to detect or prevent non-compliant materials from entering
the manufacturing process, our products could cause damages to our customers’ products or processes and could also result in fines
being incurred. The possible damages, replacement costs, and fines could significantly exceed the value of our products and these risks
may not be covered by our insurance policies.
 
We depend on our suppliers for machinery
and maintenance of machinery. We may experience delays or additional costs satisfying our production requirements due to our reliance
on these suppliers.
 
We purchase machinery and equipment used in our
manufacturing process from third-party suppliers. If our suppliers are not able to provide us with maintenance or additional machinery
or equipment as needed, we might not be able to maintain or increase our production to meet any demand for our products, which would negatively
impact our financial condition and results of operations.
 
We are a holding company and rely on dividends,
distributions, and other payments, advances, and transfers of funds from our subsidiaries to meet our obligations.
 
We are a holding company that does not conduct
any business operations of our own. As a result, we rely on cash dividends and distributions and other transfers from our operating subsidiaries
to meet our obligations. The deterioration of income from, or other available assets of, our operating subsidiaries for any reason could
limit or impair their ability to pay dividends or other distributions to us, which in turn could adversely affect our financial condition
and results of operations.
 
Periods of sustained economic adversity
and uncertainty could negatively affect our business, results of operations, and financial condition.
 
Disruptions in the financial markets, such as
what occurred in the global markets in 2008, may adversely impact the availability and cost of credit for our customers and prospective
customers, which could result in the delay or cancellation of customer purchases. In addition, disruptions in the financial markets may
have an adverse impact on regional and world economies and credit markets, which could negatively impact the availability and cost of
capital for us and our customers. These conditions may reduce the willingness or ability of our customers and prospective customers to
commit funds to purchase our services or products, or their ability to pay for our services after purchase. These conditions could result
in bankruptcy or insolvency for some customers, which would impact our revenue and cash collections. These conditions could also result
in pricing pressure and less favorable financial terms to us and our ability to access capital to fund our operations.
 
Risks Related to Operations in Jordan
 
We are affected by conditions to, and possible
reduction of, free trade agreements.
 
Because of the United States-Jordan Free Trade
Agreement and the Association Agreement between the EU and Jordan, we are able to sell our products manufactured at our facilities in
Jordan to the U.S. free from customs duties and import quotas under certain conditions and to EU countries free from customs duties. If
there is a change in such benefits or if any such agreements were terminated, our profitability may be reduced.
 
Former President Donald Trump expressed antipathy
towards trade agreements, and took a starkly protectionist approach that included withdrawal and renegotiation of trade agreements and
trade wars with China and U.S. allies alike. President Joe Biden has expressed no desire to withdraw from existing agreements, presumably
indicating that his policy will be less protectionist than former President Donald Trump’s. On the other hand, President Biden’s
Buy American plan will make it harder for foreign manufacturers to sell goods in the U.S. and his insistence on strong labor provisions
in trade agreements will likely prevent them from being implemented or protect U.S. industries when they are. It remains unclear what
specifically President Biden would or would not do with respect to trade agreements, tariffs, and duties relating to products manufactured
in Jordan. If President Biden takes action or publicly speaks out about the need to terminate or re-negotiate existing free trade agreements
on which we rely, or in favor of restricting free trade or increasing tariffs and duties applicable to our products, such actions may
adversely affect our sales and have a material adverse impact on our business, results of operations, and cash flows.
 


12
 

 
Our results of operations would be materially
and adversely affected in the event we are unable to operate our principal production facilities in Jordan.
 
All of our manufacturing process is performed
in a complex of production facilities located in Jordan. We have no effective back-up for these operations and, in the event that we are
unable to use the production facilities located in Jordan as a result of damage or for any other reason, our ability to manufacture a
major portion of our products and our relationships with customers could be significantly impaired, which would materially and adversely
affect our results of operation.
 
Our operations in Jordan may be adversely
affected by social and political uncertainties or change, military actions, health-related risks, acts of terrorism, or other geopolitical
instability.
 
From time to time, Jordan has experienced instances
of civil unrest, terrorism, and hostilities among neighboring countries, including Syria and Israel. A peace agreement between Israel
and Jordan was signed in 1994. Terrorist attacks, military activity, rioting, or civil or political unrest in the future could influence
the Jordanian economy and our operations by disrupting operations and communications and making travel within Jordan more difficult and
less desirable. In late May 2018, protests about a proposed tax bill began throughout Jordan. On June 5, 2018, King Abdullah II of Jordan
responded to the protests by removing and replacing Jordan’s prime minister. If political uncertainty rises in Jordan, our business,
financial condition, results of operations, and cash flows may be negatively impacted.
 
Political or social tensions also could create
a greater perception that investments in companies with Jordanian operations involve a high degree of risk, which could adversely affect
the market price of our common stock. We do not have insurance for losses and interruptions caused by terrorist attacks, military conflicts,
and wars, which could subject us to significant financial losses. The realization of any of these risks could cause a material adverse
effect on our business, financial condition, results of operations, and cash flows.
 
Furthermore, global markets have recently experienced
volatility and disruption following the escalation of geopolitical tensions, including the military conflict between Russia and Ukraine
and the conflict in the Gaza Strip. Specifically, Russian military forces initiated a full-scale invasion of Ukraine on February 24, 2022,
leading to sustained conflict and disruption. See “—Risk Factors Relating to our Securities—We are currently operating
in a period of economic uncertainty and capital market disruption, which has been significantly impacted by geopolitical instability due
to the ongoing military conflict between Russia and Ukraine. Our business, financial condition, and results of operations could be materially
adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other
geopolitical tensions.” Additionally, on October 7, 2023, Hamas militants and members of other terrorist organizations infiltrated
Israel’s southern border from the Gaza Strip and conducted a series of terror attacks on civilian and military targets, leading
to a declaration of war by Israel. Subsequently, there have been disruptions in the region. The intensity and duration of the current
Israel-Hamas war and the larger regional conflict are difficult to predict, as are the economic implications on our business and operations,
the global supply chain, and global geopolitical stability.
 
While we do not have any employees, staff, consultants,
operations, materials, or equipment located in Israel, Ukraine, Russia, or Belarus, all of our manufacturing processes are performed in
a complex of production facilities located in Jordan. This situation could adversely affect our business or the services being provided
to us due to concerns about conflict in the Palestinian territories. For example, when Hamas launched its attack on October 7, 2023, it
had an unfavorable impact on the Jordanian street and the country’s national security. Despite bilateral cooperation between Jordan
and the United States that may contribute to assisting the conflicting parties in ultimately achieving peace and security, we cannot assure
that our business operations will not be adversely impacted by such disputes.
 
Any of the aforementioned factors could affect
our business, prospects, financial condition, and operating results. The extent and duration of military action, sanctions, and resulting
market disruptions are impossible to predict, but could be substantial.
 
We may face interruption of production and
services due to increased security measures in response to terrorism.
 
Our business depends on the free flow of products
and services through the channels of commerce. In response to terrorists’ activities and threats aimed at the United States, transportation,
mail, financial, and other services may be slowed or stopped altogether. Extensive delays or stoppages in transportation, mail, financial,
or other services could have a material adverse effect on our business, results of operations, and financial condition. Furthermore, we
may experience an increase in operating costs, such as costs for transportation, insurance, and security as a result of the activities
and potential delays. We may also experience delays in receiving payments from payors that have been affected by the terrorist activities.
The United States economy in general may be adversely affected by terrorist activities and any economic downturn could adversely impact
our results of operations, impair our ability to raise capital, or otherwise adversely affect our ability to grow our business.
 


13
 

 
We are subject to regulatory and political
uncertainties in Jordan.
 
We conduct substantially all of our business and
operations in Jordan. Consequently, government policies and regulations, including tax policies, in Jordan will impact our financial performance
and the market price of our common stock.
 
Jordan is a constitutional monarchy, but the King
holds wide executive and legislative powers. The ruling family has taken initiatives that support the economic growth of the country.
However, there is no assurance that such initiatives will be successful or will continue. The rate of economic liberalization could change,
and specific laws and policies affecting manufacturing companies, foreign investments, currency exchange rates, and other matters affecting
investments in Jordan could change as well. A significant change in Jordan’s economic policy or any social or political uncertainties
that impact economic policy in Jordan could adversely affect business and economic conditions in Jordan generally and our business and
prospects.
 
If we violate applicable anti-corruption
laws or our internal policies designed to ensure ethical business practices, we could face financial penalties and reputational harm that
would negatively impact our financial condition and results of operations.
 
We are subject to anti-corruption and anti-bribery
laws in the United States and Jordan. Jordan’s reputation for potential corruption and the challenges presented by Jordan’s
complex business environment, including high levels of bureaucracy, red tape, and vague regulations, may increase our risk of violating
applicable anti-corruption laws. We face the risk that we, our employees, or any third parties such as our sales agents and distributors
that we engage to do work on our behalf may take action determined to be in violation of anti-corruption laws in any jurisdiction in which
we conduct business, including the Foreign Corrupt Practices Act of 1977 (the “FCPA”). Any violation of the FCPA or any similar
anti-corruption law or regulation could result in substantial fines, sanctions, civil or criminal penalties, and curtailment of operations
that might harm our business, financial condition, or results of operations.
 
Our stockholders may face difficulties in
protecting their interests and exercising their rights as a stockholder of ours because we conduct substantially all of our operations
in Jordan and certain of our officers and directors reside outside of the United States.
 
Certain of our officers and directors reside outside
the United States. Therefore, our stockholders may experience difficulties in effecting service of legal process, enforcing foreign judgments,
or bringing original actions in any of these jurisdictions based upon U.S. laws, including the federal securities laws or other foreign
laws against us, our officers, and directors. Furthermore, we conduct substantially all of our operations in Jordan through our operating
subsidiaries. Because the majority of our assets are located outside the United States, any judgment obtained in the United States against
us or certain of our directors and officers may not be collectible within the United States.
 
Risk Factors Relating to our Securities
 
If we fail to comply with the continuing
listing standards of the Nasdaq, our common stock could be delisted from the exchange.
 
If we were unable to meet the continued listing
requirements of the Nasdaq Stock Market (“Nasdaq”), our common stock could be delisted from the Nasdaq. Any such delisting
of our common stock could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock,
not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions
and less coverage of us by securities analysts, if any. Also, if in the future we were to determine that we need to seek additional equity
capital, being delisted from Nasdaq could have an adverse effect on our ability to raise capital in the public or private equity markets.
  


14
 

 
Future sales and issuances of our common
stock or rights to purchase common stock could result in additional dilution of the percentage ownership of our stockholders and could
cause the market price of our common stock to decline.
 
We may issue additional securities in the future.
Pursuant to our amended and restated 2018 Stock Incentive Plan, we may issue up to 1,784,250 shares of common stock to certain members
of our management and key employees. As of the date of this annual report, 114,110 shares of common stock remain available for issuance
under our amended and restated 2018 Stock Incentive Plan.
 
Future sales and issuances of our common stock
or rights to purchase our common stock could result in substantial dilution to our existing stockholders. We may sell common stock, convertible
securities, and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If
we sell any such securities, our stockholders may be materially diluted. New investors in any future transactions could gain rights, preferences,
and privileges senior to those of holders of our common stock.
 
If securities or industry analysts do not
publish research or reports about us, or if they adversely change their recommendations regarding our common stock, our stock price and
trading volume of our common stock could decline.
 
The trading market for our common stock will be
influenced by the research and reports that industry or securities analysts publish about us, our industry, and our market. If no analyst
elects to cover us and publish research or reports about us, the market for our common stock could be severely limited and our stock price
could be adversely affected. In addition, if one or more analysts ceases coverage of us or fails to regularly publish reports on us, we
could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. If one or more
analysts who elect to cover us issue negative reports or adversely change their recommendations regarding our common stock, the market
price of our common stock could decline.
 
The requirements of being a public company,
including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and the requirements of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), may strain our resources, increase our costs,
and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
 
We are required to comply with the laws, regulations,
requirements, and certain corporate governance provisions under the Exchange Act and the Sarbanes-Oxley Act. Complying with these statutes,
regulations, and requirements occupies a significant amount of time of our board of directors and management, significantly increases
our costs and expenses, and makes some activities more time-consuming and costly. As a reporting company, we are:
 


 
●
instituting a more comprehensive compliance function;

 


 
●
preparing and distributing periodic and current reports under the federal securities laws;

 


 
●
establishing and enforcing internal compliance policies, such as those related to insider trading; and

 


 
●
involving and retaining outside counsel and accountants to a greater degree than before we became a reporting company.

 
Our ongoing compliance efforts will increase general
and administrative expenses and may divert management’s time and attention from the development of our business, which may adversely
affect our financial condition and results of operations.
 


15
 

 
If we fail to establish and maintain an
effective system of internal controls, we may not be able to report our financial results accurately. Any inability to report and file
our financial results accurately and timely could harm our business and adversely affect the trading price of our common stock.
 
We have been required to evaluate our internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act beginning with the annual report on Form 10-K for the fiscal
year ended March 31, 2019. The process of designing and implementing internal controls over financial reporting may divert our internal
resources and take a significant amount of time and expense to complete.
 
In connection with the preparation and external
audit of our consolidated financial statements for the fiscal year ended March 31, 2023, we identified certain material weaknesses in
our internal control over financial reporting and have formulated plans for remedial measures. Although some remedial measures have been
implemented, our management concluded that our internal control over financial reporting was still ineffective as of March 31, 2024. See
“Item 9A. Controls and Procedures.”
 
However, our management team cannot guarantee
that our internal controls and disclosure controls and procedures will prevent all possible errors. Because of the inherent limitations
in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within
the Company have been detected. These inherent limitations include the possibility that judgments in decision-making can be faulty and
subject to simple error or mistake. Furthermore, controls can be circumvented by individual acts of some persons, by collusion of two
or more persons, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, measures of control may become inadequate because of changes in conditions or the degree of
compliance with policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and may not be detected. 
 
We incur and will continue to incur increased
costs and demands upon management as a result of being a public company.
 
As a public company listed in the United States,
we incur, and will continue to incur, now that we have ceased to be an “emerging growth company,” significant legal, accounting,
and other costs. These costs could negatively affect our financial results. In addition, changing laws, regulations, and standards relating
to corporate governance and public disclosure, including regulations implemented by the SEC and Nasdaq, may increase legal and financial
compliance costs and make some activities more time-consuming. These laws, regulations, and standards are subject to varying interpretations
and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
 
We are committed to comply with evolving laws,
regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s
time and attention from revenue-generating activities to compliance activities. If we do not comply with new laws, regulations, and standards,
regulatory authorities may initiate legal proceedings against us and our business may be harmed.
 
Failure to comply with these rules might also
make it more difficult for us to obtain some types of insurance, including director and officer liability insurance, and we might be forced
to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of
these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees
of our board of directors or as members of senior management.
 


16
 

 
We are currently operating in a period of
economic uncertainty and capital market disruption, which has been significantly impacted by geopolitical instability due to the ongoing
military conflict between Russia and Ukraine. Our business, financial condition, and results of operations could be materially adversely
affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical
tensions.
 
U.S. and global markets are experiencing volatility
and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On
February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing
military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility
in commodity prices, credit and capital markets, and supply chain interruptions.
 
The military conflict in Ukraine has led to sanctions
and other penalties being levied by the United States, European Union, and other countries against Russia. Additional potential sanctions
and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the
global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult
for us to obtain additional funds. In addition, in managing an organization operating globally, we are subject to the risks and challenges
related to the potential to subject our business to materially adverse consequences should the situation escalate beyond its current scope,
including, among other potential impacts, the geographic proximity of the situation relative to the Middle East, where a material portion
of our business is conducted.
 
Although our business has not been materially
impacted by the ongoing military conflict between Russian and Ukraine to date, it is impossible to predict the extent to which our operations,
or those of our suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impact
our business. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, but
could be substantial. Any such disruptions may also magnify the impact of other risks described in this annual report.
 
We may be adversely affected by the effects
of inflation and a potential recession. 
 
Inflation has the potential to adversely affect
our liquidity, business, financial condition, and results of operations by increasing our overall cost structure, particularly if we are
unable to achieve commensurate increases in the prices we charge our customers. The existence of inflation in the economy has resulted
in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor,
weakening exchange rates, and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost
increases. In addition, poor economic and market conditions, including a potential recession, may negatively impact market sentiment,
decreasing the demand for sportswear and outerwear, which would adversely affect our operating income and results of operations. If we
are unable to take effective measures in a timely manner to mitigate the impact of the inflation as well as a potential recession, our
business, financial condition, and results of operations could be adversely affected. 
 
Item 1B. Unresolved Staff Comments.
 
None.
 
Item 1C. Cybersecurity.
 
Risk Management and Strategy
 
Cybersecurity is a vital aspect of maintaining
the trust of our customers and employees. We have instituted a comprehensive cybersecurity risk management program that employs various
methods to monitor and assess our threat environment and risk profile. These methods include the use of manual and automated tools, conducting
scans of the threat environment, evaluating our and our industry’s risk profile, evaluating threats reported to us and conducting
vulnerabilities assessments. We have company-wide policies and procedures in place that further enhance our ability to identify and manage
cybersecurity risks. Our employees receive ongoing training under our security policies.
 


17
 

 
Annual risk assessments and penetration
testing are primarily performed by our internal staff, and we have not engaged any third parties in connection with such processes
except that we have an external Management Information Systems consultant, or MIS consultant, who provides advices to our CEO in the
review of test results. We believe these tests are useful tools for maintaining a robust cybersecurity program to protect our
investors, customers, employees, vendors, and intellectual property. The results of these tests are presented annually to the CEO,
with support provided by our external MIS consultant, for review to ensure compliance with cybersecurity standards.
 
During the fiscal year ended March 31, 2024, we
have not identified any risks from cybersecurity threats that have materially affected our business operations or financial conditions.
 
Governance
 
Our CEO, MIS consultant, and MIS supervisor oversee
risk management to ensure that the Company’s policies and procedures are functioning as intended to protect the Company’s
information systems from cybersecurity threats.
 
More specifically, MIS supervisor is responsible
for identifying and assessing cybersecurity risks on an ongoing basis, establishing processes designed to ensure that such potential cybersecurity
risk exposures are monitored, putting in place appropriate mitigation and remediation measures, and maintaining cybersecurity programs.
Our cybersecurity programs are managed under the direction of CEO and MIS consultant, and MIS supervisor monitors the prevention, detection,
mitigation, and remediation of cybersecurity risks. MIS supervisor regularly updates the CEO on the Company’s cybersecurity programs,
material cybersecurity risks and mitigation strategies and provides regular cybersecurity updates.
 
Item 2. Properties.
 
Jerash Garments and Kawkab own two industrial
buildings of approximately 136,000 and 79,000 square feet, respectively, a dormitory building with a kitchen area of approximately 195,000
square feet, and one piece of land of approximately 133,000 square feet in Al Tajamouat Industrial City. We lease additional space totaling
approximately 527,000 square feet in industrial buildings in Al Tajamouat Industrial City. In addition, we lease space for our workers
in dormitories located inside and outside of Al Tajamouat Industrial City.
 
Treasure Success owns an office space in Hong
Kong through acquisition of Ever Winland on August 29, 2022. Prior to the acquisition, Treasure Success leased the office space pursuant
to a tenancy agreement dated February 26, 2021. The tenancy agreement had a term from February 26, 2021 to February 25, 2023, with a rent
in the amount of HK$119,540 (approximately $15,326) per month. See “—Item 1. Business—Organizational Structure.”
  
In 2015, we commenced a project to build a 4,800
square-foot workshop in the Tafilah Governorate of Jordan and completed it in September 2021. We now use the building as a dormitory to
house management and supervisory staff who work at the factory in Al-Hasa County as discussed below.
 
In 2018, we commenced another project to build
a 54,000 square-foot factory in Al-Hasa County in the Tafilah Governorate of Jordan, which started operation in November 2019. This project
is a joint project with the Jordanian Ministry of Labor and the Employment and Training Department in Jordan. The Ministry of Labor financed
the building of the factory and the Employment and Training Department supported 50% of the workers’ salaries, as well as transportation
and social security costs in the first 12 months following the completion of the project. We used the factory without paying rent through
December 2022. We have continued to use the factory without paying rent since January 2023 as new arrangements with the Jordanian Ministry
of Labor are still being made.
 


18
 

 
In April 2021, we commenced construction on a
189,000-square-foot housing facility for our multi-national workforce, situated on a 49,000-square-foot site owned by us, located in Al
Tajamouat Industrial City. The construction has been completed as of the date of this annual report and our workers have started moving
in. To meet increasing demand, we are also finalizing plans to construct an additional project on a nearby 133,000-square-foot parcel
that we purchased in 2019 for $1.2 million, with 2/3 of the land expected to be allocated for the establishment of our seventh factory
and 1/3 for housing purposes. As of the date of this annual report, we are working with engineering consultants to proceed with the architectural
design of these buildings. However, execution of this construction plan will depend on the progress of the Company’s business development
and an ongoing assessment of customer order condition.
 
On January 1, 2021, Jiangmen Treasure Success
entered a factory lease agreement with an independent third party. The lease has a five-year term with monthly rent amount of CNY50,245
(approximately $7,300) for the first year, CNY60,270 (approximately $8,800) for the second year, and 5% further annual increments starting
from the third year.
 
On June 24, 2021, we entered into an agreement
through Jerash Garments to acquire all of the stock of an existing garment manufacturing business in order to operate our fifth manufacturing
facility in Al Tajamouat Industrial City located in Amman, Jordan.
 
On July 14, 2021, Jerash Garments and the sole
shareholder of Kawkab Venus entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of Kawkab
Venus. Apart from the land and factory premises, Kawkab Venus had no other significant assets or liabilities and no operation activities
or employees at the time of acquisition, so the acquisition was accounted for an asset acquisition. As of August 21, 2022, Kawkab Venus
became a subsidiary of Jerash Garments.
 
We believe the real estate property that we own
and lease is sufficient to conduct our operations as they are currently conducted.
 
Item 3. Legal Proceedings.
 
We are not currently involved in any material
legal proceedings. From time-to-time we are, and we anticipate that we will be, involved in legal proceedings, claims, and litigation
arising in the ordinary course of our business and otherwise. The ultimate costs to resolve any such matters could have a material adverse
effect on our financial statements. We could be forced to incur material expenses with respect to these legal proceedings, and in the
event that there is an outcome in any that is adverse to us, our financial position and prospects could be harmed.
 
Item 4. Mine Safety Disclosures
 
Not applicable.
 


19
 

 
PART II
 
Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
Our common stock has been traded and quoted on
the Nasdaq Capital Market under the symbol “JRSH” since May 4, 2018. Before that, our stock was not traded on any stock exchange.
As of June 27, 2024, there were 12,294,840 shares of common stock issued and outstanding held by approximately 40 stockholders of record.
 
Since November 2018, the Board of Directors of
Jerash Holdings has declared a quarterly cash dividend payable to holders of its common stock. Subject to the discretion of the Board
of Directors and applicable law, we currently expect to continue declaring comparable quarterly cash dividends in the future.
 
For information on securities authorized for issuance
under our existing equity compensation plan, see Item 12 under the heading “Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.”
 
In the fourth quarter of the fiscal year ended
March 31, 2024, the Company has not made any repurchases of its outstanding shares of common stock.
 
During the fiscal years ended March 31, 2024 and
2023, we did not have sales of unregistered securities other than those already disclosed in the quarterly reports on Form 10-Q in the
fiscal years 2024 and 2023, and current reports on Form 8-K.
 
Item 6. [Reserved].
 
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
 
The following discussion of our financial condition
and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere
in this filing.
 
Executive Overview
 
Seasonality of Sales
 
A significant portion of our revenue is received
during the first six months of our fiscal year. The majority of our VF Corporation orders are derived from winter season fashions, the
sales of which occur in Spring and Summer and are merchandized by VF Corporation during the months of September through November. As such,
the second half of our fiscal years reflect lower sales in anticipation of the spring and summer seasons. One of our strategies is to
increase sales with other customers where clothing lines are stronger during the spring months. This strategy also reflects our current
plan to increase our number of customers to mitigate our current concentration risk with VF Corporation.
 


20
 

 
Results of Operations
 
The following table presents certain information
from our consolidated statements of operations and comprehensive income (loss) for the fiscal years ended March 31, 2024 and 2023 and
should be read, along with all of the information in this management’s discussion and analysis, in conjunction with the consolidated
financial statements and related notes included elsewhere in this filing.
 
(All amounts, other than percentages, in thousands
of U.S. dollars)
 


  
Fiscal Years Ended March 31,  
   
  

  
2024  
2023  
  

  
   
As % of  
   
As % of  
Year over Year 

Statement of Income Data: 
Amount  
Sales  
Amount  
Sales  
Amount  
% 

Revenue 
$117,187  
 100% 
$138,063  
 100% 
$(20,876) 
 (15)%

Cost of goods sold 
 100,285  
 86% 
 116,273  
 84% 
 (15,988) 
 (14)%

Gross profit 
 16,902  
 14% 
 21,790  
 16% 
 (4,888) 
 (22)%

Selling, general, and administrative expenses 
 17,567  
 15% 
 17,375  
 13% 
 192  
 1%

Other expenses, net 
 705  
 0% 
 331  
 0% 
 374  
 113%

Net (loss) income before taxation 
$(1,370) 
 (1)% 
$4,084  
 3% 
$(5,454) 
 (134)%

Income tax expense 
 672  
 1% 
 1,664  
 1% 
 (992) 
 (60)%

Net (loss) income 
$(2,042) 
 (2)% 
$2,420  
 2% 
$(4,462) 
 (184)%

  
Revenue. Our revenue was $117.2
million for fiscal 2024, compared to $138.1 million for fiscal 2023, a decrease of $20.9 million, or 15%, primarily due to reduced shipments
to two of our major customers in the U.S., which is our main export market.
 
The following table outlines the dollar amount
and percentage of total sales to our customers for the fiscal years ended March 31, 2024 and 2023, respectively.
 
(All amounts, other than percentages, in thousands
of U.S. dollars)
 


  
Fiscal Year Ended March 31,  2024  
Fiscal Year Ended March 31,  2023 

  
Sales  
   
Sales  
  

  
Amount  
%  
Amount  
% 

VF Corporation(1) 
$78,912  
 67.3% 
$82,661  
 59.9%

New Balance 
 13,931  
 11.9% 
 24,124  
 17.5%

G-III 
 5,773  
 4.9% 
 5,589  
 4.0%

Hugo Boss 
 2,920  
 2.5% 
 74  
 0.1%

Jiangsu Guotai Huasheng Industrial Co (HK)., Ltd 
 2,774  
 2.4% 
 9,454  
 6.8%

Easy Long International Limited 
 2,436  
 2.1% 
 -  
 -%

Acushnet 
 1,562  
 1.3% 
 88  
 0.1%

Others 
 8,879  
 7.6% 
 16,073  
 11.6%

Total 
$117,187  
 100.0% 
$138,063  
 100.0%

 


(1)
A large portion of our products are sold under The North Face, Timberland, and Vans brands owned by VF Corporation.

 


21
 

 
Revenue by Geographic Area
(All amounts, other than percentages, in thousands
of U.S. dollars)
 


  
Fiscal Years Ended March 31,  
  

  
2024  
2023  
Year over Year 

Region 
Amount  
%  
Amount  
%  
Amount  
% 

United States 
$102,520  
 88% 
$122,318  
 89% 
$(19,798) 
 (16)%

Hong Kong 
 5,208  
 4% 
 9,474  
 7% 
 (4,266) 
 (45)%

Germany 
 2,920  
 2% 
 74  
 0% 
 2,846  
 3,846%

Jordan 
 2,179  
 2% 
 4,892  
 3% 
 (2,713) 
 (55)%

Others 
 4,360  
 4% 
 1,305  
 1% 
 3,055  
 234%

Total 
$117,187  
 100% 
$138,063  
 100% 
$(20,876) 
 (15)%

 
Since January 2010, all apparel manufactured in
Jordan can be exported to the U.S. without customs duty being imposed, pursuant to the United States-Jordan Free Trade Agreement entered
into in December 2001. This free trade agreement provides us with substantial competitiveness and benefit that allowed us to expand our
garment export business in the U.S.
 
The decrease of approximately 16% in sales to
the U.S. during fiscal 2024 was mainly attributable to the reduced shipments to our major customers in the U.S., which is our main export
market. This decline was influenced by higher inflation and uncertain retail sentiment as well as the supply chain logistics disruptions
with the Red Sea crisis.
 
During fiscal 2024, aggregate sales to Jordan,
Hong Kong, Germany, and other locations, such as mainland China, decreased by 7% from approximately $15.7 million in fiscal 2023 to $14.7
million. This decline can be attributed to a decrease in shipments sent to a major customer in Hong Kong, which was not fully offset by
the increase in sales to a customer in Germany.
 
Cost of goods sold. Our cost
of goods sold experienced a decrease of approximately $16.0 million to approximately $100.3 million in fiscal 2024 from approximately
$116.3 million in fiscal 2023. As a percentage of revenue, the cost of goods sold increased by approximately two percentage points to
86% in fiscal 2024 from 84% in fiscal 2023. The increase in the cost of goods sold as a percentage of revenue was primarily attributable
to changes in the product mix of one of our major customers, which led to more sales of lower margin items. In addition, the reduced shipments
to another U.S. customer in fiscal 2024 was only partially offset by new customers with lower margin.
 
For the fiscal year ended March 31, 2024 and 2023,
we purchased approximately 10% and 11%, respectively, of our garments from one major supplier.
 
Gross profit margin. Our gross profit
margin was approximately 14% in fiscal 2024, representing a decrease by approximately two percentage points from 16% in fiscal 2023. The
decrease in gross profit margin was primarily influenced by the lower margin on orders from new customers, introduced to compensate the
decrease in shipments to our two major customers in the U.S.
 
Selling, general, and administrative expenses.
Selling, general, and administrative expenses increased slightly and remained almost the same at approximately $17.4 million
and $17.6 million in fiscal 2023 and fiscal 2024. The slight increase was mainly attributable to penalties of approximately $180,000
in aggregate in two legal cases. One case was in relation to the implementation of LED facilities without completing all necessary official
procedures. The other case was in relation to the movement of raw materials across tax zones in Jordan without prior customs notification
and completing official procedures for our cut-and-make orders.
 
Other expenses, net. Other
expenses, net were approximately $0.7 million in fiscal 2024, compared to other expenses, net of approximately $0.3 million in fiscal
2023. The increase in other expenses from fiscal 2023 to fiscal 2024 was primarily due to an increase in financing costs arisen from the
supply chain financing programs of two major customers, which was only partially offset by the interest income from fixed deposit in banks.
 
Taxation. Income tax expenses for fiscal 2024 were approximately $0.7 million, compared to income tax expenses of approximately $1.7 million for
fiscal 2023. The effective tax rate for fiscal 2024 decreased to -49.1%, compared to 40.7% for fiscal 2023. The decrease in the effective
tax rate mainly resulted from a higher proportion of the operating loss of a Hong Kong subsidiary and our holding company, and the decrease
in operating profit in Jordan companies. In addition, Jordan increased the corporate income tax rate from a combined rate of 18% as of
January 1, 2022 to 21% effective on January 1, 2024, which further reduced the effective tax rate as we had a net operating loss in fiscal
2024.
  
Net loss. Net loss for fiscal 2024
was $2.0 million, compared to net profit of approximately $2.4 million for fiscal 2023. The net loss mainly attributable to lower sales
and gross margins discussed above.
 


22
 

 
Liquidity and Capital Resources
 
Jerash Holdings is a holding company incorporated
in Delaware. As a holding company, we rely on dividends and other distributions from our Jordanian and Hong Kong subsidiaries to satisfy
our liquidity requirements. Current Jordanian regulations permit our Jordanian subsidiaries to pay dividends to us only out of their accumulated
profits, if any, determined in accordance with Jordanian accounting standards and regulations. In addition, our Jordanian subsidiaries
are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds. These
reserves are not distributable as cash dividends. We have relied on direct payments of expenses by our subsidiaries to meet our obligations
to date. To the extent payments are due in U.S. dollars, we have occasionally paid such amounts in JOD to an entity controlled by our
management capable of paying such amounts in U.S. dollars. Such transactions have been made at prevailing exchange rates and have resulted
in immaterial losses or gains on currency exchange.
 
As of March 31, 2024, our cash balance was approximately
$12.4 million and restricted cash was approximately $1.6 million, compared to cash of approximately $17.8 million and restricted cash
of approximately $1.6 million as of March 31, 2023. The decrease in total cash during fiscal 2024 was primarily due to dividend payments
of $2.5 million and payment of $4.8 million on additional property, plant, and equipment and construction of properties in fiscal 2024.
 
Our current assets as of March 31, 2024 were approximately
$50.9 million, and our current liabilities were approximately $14.8 million, which resulted in a current ratio of approximately 3.4 to
1. Our current assets as of March 31, 2023 were approximately $57.3 million, and our current liabilities were approximately $14.4 million,
which resulted in a current ratio of approximately 4.0:1. For fiscal 2024, the decrease in current assets were primarily due to the decrease
in inventory and cash, which was partially offset by the increase in accounts receivable and advances to suppliers. The decrease in current
liabilities was primarily driven by the decrease in income tax payable and deferred revenue, which was partially compensated by the increase
in accounts payables, accruals, and other payables.
 
We had net working capital of $36.1 million and
$42.8 million as of March 31, 2024 and 2023, respectively. Based on our current operating plan, we believe that cash on hand and cash
generated from operation will be sufficient to support our working capital needs for the next 12 months from the date of this Annually
Report.
 
Since May and October 2021, we have participated
in supply chain financing programs of two of our major customers, respectively. The programs allow us to receive early payments for approved
sales invoices submitted by us through the bank the customer cooperates with. For any early payments received, we are subject to an early
payment charge imposed by the customer’s bank, for which the rate is Secured Overnight Financing Rate (“SOFR”) plus
a spread. The arrangement allows us to have better liquidity without the need to incur administrative charges and handling fees as in
bank financing.
 
We have funded our working capital needs from
operations. Our working capital requirements are influenced by the level of our operations, the numerical and dollar volume of our sales
contracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections.
 
Credit Facilities
 
DBS Facility Letter 
 
Pursuant to the DBS facility letter dated January
12, 2022, DBSHK provided a bank facility of up to $5.0 million to Treasure Success, which was amended pursuant to a facility letter dated
January 4, 2024. Pursuant to the amended agreement, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, and
certain type of import and export invoice financing up to an aggregate of $5.0 million, subject to certain financial covenants. The DBSHK
facility bears interest at 1.5% per annum over HIBOR for HKD bills and 1.1% to 1.3% per annum over DBSHK’s cost of funds for foreign
currency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of March 31, 2024
and 2023, we had $nil outstanding under this DBSHK facility.
 


23
 

 
Fiscal Years ended March 31, 2024 and 2023
 
The following table sets forth a summary of our
cash flows for the fiscal years ended March 31, 2024 and 2023.
 
(All amounts in thousands of U.S. dollars)
 


  
For the fiscal years ended  March 31, 

  
2024  
2023 

Net cash provided by operating activities 
$2,485  
$10,807 

Net cash used in investing activities 
 (5,143) 
 (13,775)

Net cash used in financing activities 
 (2,428) 
 (3,953)

Effect of exchange rate changes on cash 
 (289) 
 (250)

Net decrease in cash and restricted cash 
 (5,375) 
 (7,171)

Cash and restricted cash, beginning of year 
 19,412  
 26,583 

Cash and restricted cash, end of year 
$14,037  
$19,412 

Supplemental disclosure information 
    
   

Cash paid for interest 
$1,204  
$768 

Income tax paid 
$2,253  
$1,748 

Non-cash investing and financing activities 
    
   

Equipment obtained by utilizing long-term deposit 
$355  
$237 

Acquisition of Kawkab Venus by utilizing long-term deposit 
$-  
$500 

Operating lease right of use assets obtained in exchange for operating lease obligations 
$1,059  
$191 

 
Operating Activities
 
Net cash provided by operating activities was
approximately $2.5 million in fiscal 2024, compared to net cash provided by operating activities of approximately $10.8 million in fiscal
2023. The decrease in net cash provided by operating activities was primarily attributable to the following factors:
 

●A net loss of $2.0 million
during fiscal 2024, compared to a profit of $2.4 million during fiscal 2023;

 

●An increase in accounts receivable
of $3.0 million during fiscal 2024, compared to a decrease of $8.8 million during fiscal 2023;

 


 
●
A decrease in income tax payable, current of $1.5 million during fiscal 2024, compared to an increase of $92,000 during fiscal 2023;

 

●A decrease in inventory of
$5.4 million during fiscal 2024, compared to an increase of $4.4 million during fiscal 2023; and

 

●An increase in advances to
suppliers of $1.6 million during fiscal 2024, compared to an increase of $0.2 million during fiscal 2023.

 


24
 

 
Investing Activities
 
Net cash used in investing activities was approximately
$5.1 million and $13.8 million for fiscal 2024 and 2023, respectively. The net cash used in investing activities in the fiscal year ended
March 31, 2024 was used in investment in property, plant, and machinery, including construction of a dormitory and factory expansion.
The decrease in net cash used in fiscal 2024 compared to fiscal 2023 was primarily because $7.3 million was used in the acquisition of
Ever Winland and Kawkab Venue in fiscal 2023.
 
Financing Activities
 
Cash used in financing activities was $2.4 million
in fiscal 2024, which was primarily related to dividend payments in the period. Net cash used in financing activities was approximately
$4.0 million for fiscal 2023, mainly due to dividend payments of approximately $2.5 million and payments for a share repurchase program
of approximately $1.2 million.
 
Statutory Reserves
 
In accordance with the corporate Law in Jordan,
Jerash Holdings’ subsidiaries in Jordan are required to make appropriations to certain reserve funds, based on net income determined
in accordance with generally accepted accounting principles of Jordan. Appropriations to the statutory reserve are required to be 10%
of net income until the reserve is equal to 100% of the entity’s share capital. Jiangmen Treasure Success is required to set aside
10% of its net income as statutory surplus reserve until such reserve is equal to 50% of its registered capital. These reserves are not
available for dividend distribution. The statutory reserve was $413,821 and $410,847 as of March 31, 2024 and 2023, respectively.
 
The following table provides the amount of our
statutory reserves, the amount of restricted net assets, consolidated net assets, and the amount of restricted net assets as a percentage
of consolidated net assets, as of March 31, 2024 and 2023.
 
(All amounts, other than percentages, in thousands
of U.S. dollars)
 


  
As of March 31, 

  
2024  
2023 

Statutory Reserves 
$414  
$411 

Total Restricted Net Assets 
$414  
$411 

Consolidated Net Assets 
$64,431  
$68,234 

Restricted Net Assets as Percentage of Consolidated Net Assets 
 0.64% 
 0.60%

 
Total restricted net assets accounted for approximately
0.64% of our consolidated net assets as of March 31, 2024. As our subsidiaries in Jordan are only required to set aside 10% of net profits
to fund the statutory reserves, we believe the potential impact of such restricted net assets on our liquidity is limited.
 
Capital Expenditures
 
We had capital expenditures of approximately $5.1
million and $13.8 million in fiscal 2024 and 2023, respectively. For the fiscal year ended March 31, 2024, payments for additional plant
and machinery, and construction of a dormitory and factory expansion, amounted to approximately $1.2 million and $3.6 million, respectively.
For the fiscal year ended March 31, 2023, our capital expenditures included investments in additional plant and machinery, the construction
of a dormitory and factory expansion, the acquisition of Kawkab Venus, and the acquisition of Ever Winland, which totaled approximately
$0.7 million, $5.1 million, $2.2 million, and $5.1 million, respectively.
 


25
 

 
On August 7, 2019, we completed a transaction to acquire 12,340 square meters (approximately three acres) of land in Al Tajamouat Industrial
City, Jordan, from a third party to construct a dormitory for our employees with aggregate purchase price JOD863,800 (approximately $1,218,303).
Management has revised the plan to construct both dormitory and production facilities on the land in order to capture the increasing demand
for our capacity. We are conducting engineering design and study on this project with the business growth potential brought about by the
new business collaboration with Busana Apparel Group. On February 6, 2020, we completed a transaction to acquire 4,516 square meters (approximately
48,608 square feet) of land in Al Tajamouat Industrial City, Jordan, from a third party to construct a dormitory for our employee with
aggregate purchase price JOD313,501 (approximately $442,162). The dormitory is expected to be
fully completed in second quarter of fiscal year 2025. We have spent approximately $9.3 million in capital expenditures to build the dormitory.
The dormitory’s kitchen is under construction at an estimated cost of approximately $0.9 million.
 
We project that there will be an aggregate of
approximately $12.6 million and $14.9 million of capital expenditures in the fiscal years ending March 31, 2025 and 2026, respectively,
for further enhancement of production capacity to meet future sales growth. The realization of these investments depends on the progress
of our business development, including expanding our client base and securing increased commitments from existing customers. We expect
that our capital expenditures will increase in the future as our business continues to develop and expand. We have used cash generated
from operations of our subsidiaries to fund our capital commitments in the past and anticipate using such funds to fund capital expenditure
commitments in the future.
 
Off-balance Sheet Commitments and Arrangements
 
We have not entered into any other financial guarantees
or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts
that are indexed to our own shares and classified as stockholders’ equity, or that are not reflected in our consolidated financial
statements.
 
For Management’s Discussion and Analysis
of the fiscal years ended March 31, 2023 and 2022, please see our Annual Report on Form 10-K for the fiscal year ended March 31, 2023,
filed with the SEC on June 28, 2023.
 
Critical Accounting Estimates
        
We prepare our consolidated financial statements
in conformity with accounting principles generally accepted by the United States of America, which require us to make judgments, estimates,
and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although
there were no material changes made to the accounting estimates and assumptions in the past two years, we continually evaluate these estimates
and assumptions based on the most recently available information, our own historical experience, and various other assumptions that we
believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process,
actual results could differ from our expectations as a result of changes in our estimates. We have not identified any critical accounting
estimates.
 
Recent Accounting Pronouncements
 
See “Note 3—Recent Accounting Pronouncements”
in the notes to our audited consolidated financial statements for a discussion of recent accounting pronouncements.
 
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
 
Not applicable.
 


26
 

 
Item 8. Financial Statements and Supplementary Data.
 
JERASH HOLDINGS (US), INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
 
      Page  Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID # 688)   F-2  Consolidated Balance Sheets as of March 31, 2024 and 2023   F-3  Consolidated Statements of Operations and Comprehensive Income (Loss) for the Fiscal Years ended March 31, 2024 and 2023   F-4  Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years ended March 31, 2024 and 2023   F-5  Consolidated Statements of Cash Flows for the Fiscal Years ended March 31, 2024 and 2023   F-6  Notes to Consolidated Financial Statements   F-7–F-25 
 


F-1
 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
 
To the Stockholders and Board of Directors of
Jerash Holdings (US), Inc.
 
Opinion on the Financial Statements
 
We have audited the accompanying consolidated
balance sheets of Jerash Holdings (US), Inc. (the “Company”) as of March 31, 2024 and 2023, the related consolidated statements
of operations and comprehensive income (loss), changes in stockholders’ equity and cash flows for the two years in the period ended
March 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results
of its operations and its cash flows for each of the two years in the period ended March 31, 2024, in conformity with accounting principles
generally accepted in the United States of America.
 
Basis for Opinion
 
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
 
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 
Critical Audit Matters
 
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there are no critical audit matters.
 
/s/ Marcum llp
 
Marcum llp
 
We have served as the Company’s auditor since 2016 (such date
takes into account the acquisition of certain assets of Friedman LLP by Marcum LLP effective September 1, 2022).
 
Costa Mesa, CA 
June 28, 2024
 

F-2
 

 
JERASH HOLDINGS (US), INC., 
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 


  
March 31, 2024  
March 31, 2023 

  
   
  

ASSETS 
   
  

Current Assets: 
   
  

Cash 
$12,428,369  
$17,801,614 

Accounts receivable, net 
 5,417,513  
 2,240,537 

Bills receivable 
 -  
 87,573 

Inventories 
 27,241,573  
 32,656,833 

Prepaid expenses and other current assets 
 2,746,068  
 2,964,578 

Advances to suppliers, net 
 3,086,137  
 1,533,091 

Total Current Assets 
 50,919,660  
 57,284,226 

  
    
   

Restricted cash – non-current 
 1,608,498  
 1,609,989 

Long-term deposits 
 802,306  
 841,628 

Deferred tax assets, net 
 158,329  
 153,873 

Property, plant, and equipment, net 
 24,998,096  
 22,355,574 

Goodwill 
 499,282  
 499,282 

Operating lease right of use assets 
 1,259,395  
 974,761 

Total Assets 
$80,245,566  
$83,719,333 

  
    
   

  
    
   

LIABILITIES AND EQUITY 
    
   

  
    
   

Current Liabilities: 
    
   

Accounts payable 
$6,340,237  
$5,782,570 

Accrued expenses 
 4,175,843  
 2,930,533 

Income tax payable – current 
 1,647,199  
 2,846,201 

Other payables 
 2,234,870  
 1,477,243 

Deferred revenue 
 10,200  
 928,393 

Operating lease liabilities – current 
 370,802  
 481,502 

Total Current Liabilities 
 14,779,151  
 14,446,442 

  
    
   

Operating lease liabilities – non-current 
 618,302  
 287,247 

Income tax payable – non-current 
 417,450  
 751,410 

Total Liabilities 
 15,814,903  
 15,485,099 

  
    
   

Commitments and Contingencies (Note 16) 
    
   

  
    
   

Equity 
    
   

Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding 
$-  
$- 

Common stock, $0.001 par value; 30,000,000 shares authorized; 12,534,318 shares issued, and 12,294,840 shares outstanding 
 12,534  
 12,534 

Additional paid-in capital 
 23,917,094  
 22,931,046 

Treasury stock, 239,478 shares 
 (1,169,046) 
 (1,169,046)

Statutory reserve 
 413,821  
 410,847 

Retained earnings 
 41,704,238  
 46,172,082 

Accumulated other comprehensive loss 
 (492,319) 
 (123,229)

Total Jerash Holdings (US), Inc.’ Stockholders’ Equity 
 64,386,322  
 68,234,234 

  
    
   

Noncontrolling interest 
 44,341  
 - 

Total Equity 
 64,430,663  
 68,234,234 

  
    
   

Total Liabilities and Equity 
$80,245,566  
$83,719,333 

 


The accompanying notes are an integral part of these consolidated financial statements.
 

F-3
 

 
JERASH HOLDINGS (US), INC., 
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
 


  
For the Fiscal Years Ended March 31 

  
2024  
2023 

  
   
  

Revenue, net 
$117,187,340  
$138,063,309 

Cost of goods sold 
 100,284,991  
 116,273,569 

Gross Profit 
 16,902,349  
 21,789,740 

  
    
   

Selling, general, and administrative expenses 
 16,581,256  
 16,960,978 

Stock-based compensation expenses 
 986,048  
 413,900 

Total Operating Expenses 
 17,567,304  
 17,374,878 

  
    
   

(Loss) Income from Operations 
 (664,955) 
 4,414,862 

  
    
   

Other Income (Expenses): 
    
   

Interest expenses 
 (1,203,596) 
 (768,131)

Other income, net 
 499,120  
 437,002 

Total other expenses, net 
 (704,476) 
 (331,129)

  
    
   

Net (loss) income before provision for income taxes 
 (1,369,431) 
 4,083,733 

  
    
   

Income tax expenses 
 672,495  
 1,664,110 

  
    
   

Net (loss) income 
 (2,041,926) 
 2,419,623 

  
    
   

Net loss attributable to noncontrolling interest 
 36,024  
 - 

Net (loss) income attributable to Jerash Holdings (US), Inc.’s Common Stockholders 
$(2,005,902) 
$2,419,623 

  
    
   

Net (loss) income 
$(2,041,926) 
$2,419,623 

Other Comprehensive Income (Loss): 
    
   

Foreign currency translation loss 
 369,090  
 250,374 

Total Comprehensive (Loss) Income 
 (2,411,016) 
 2,169,249 

Comprehensive loss attributable to noncontrolling interest 
 36,024  
 - 

Comprehensive (Loss) Income Attributable to Jerash Holdings (US), Inc.’s Common Stockholders 
$(2,374,992) 
$2,169,249 

  
    
   

(Loss) Earnings Per Share Attributable to Common Stockholders: 
    
   

Basic and diluted 
$(0.16) 
$0.19 

  
    
   

Weighted Average Number of Shares 
    
   

Basic 
 12,294,840  
 12,635,785 

Diluted 
 12,294,840  
 12,675,351 

  
    
   

Dividend per share 
$0.20  
$0.20 

 
The accompanying notes are an integral part of these consolidated financial statements.
 

F-4
 

 
JERASH HOLDINGS (US), INC., 
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE FISCAL YEARS ENDED MARCH 31, 2024 AND 2023
 


  
   
   
   
   
   
   
   
   
Accumulated Other  
   
  

  
Preferred Stock  
Common Stock  
Additional Paid-in  
 Treasury  
 Statutory  
 Retained  
Comprehensive Gain  
Noncontrolling  
Total 

  
Shares  
Amount  
Shares  
Amount  
Capital  
 Stock  
 Reserve  
 Earnings  
(Loss)  
interest  
 Equity 

Balance at March 31, 2022 
     -  
$      -  
 12,334,318  
$12,334  
$22,517,346  
$-  
$379,323  
$46,268,110  
$127,145  
$-  
$69,304,258 

  
    
    
    
    
    
    
    
    
    
    
 - 

Stock-based compensation expense for the restricted stock units issued under stock incentive plan 
 -  
 -  
 -  
 -  
 413,900  
 -  
 -  
 -  
 -  
 -  
 413,900 

Issuance of common stocks upon vesting of restricted stock units 
 -  
 -  
 200,000  
 200  
 (200) 
 -  
 -  
 -  
 -  
 -  
 - 

Share repurchase 
 -  
 -  
 -  
 -  
 -  
 (1,169,046) 
 -  
 -  
 -  
 -  
 (1,169,046)

Net income 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 2,419,623  
 -  
 -  
 2,419,623 

Dividend payments 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 (2,484,127) 
 -  
 -  
 (2,484,127)

Statutory Reserve 
 -  
 -  
 -  
 -  
 -  
 -  
 31,524  
 (31,524) 
 -  
 -  
 - 

Foreign currency translation loss 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 (250,374) 
 -  
 (250,374)

  
 　  
    
    
    
    
    
    
    
    
    
   

Balance at March 31, 2023 
 -  
$-  
 12,534,318  
$12,534  
$22,931,046  
$(1,169,046) 
$410,847  
$46,172,082  
$(123,229) 
$-  
$68,234,234 

  
    
    
    
    
    
    
    
    
    
    
   

Balance at March 31, 2023 
 -  
$-  
 12,534,318  
$12,534  
$22,931,046  
$(1,169,046) 
$410,847  
$46,172,082  
$(123,229) 
$-  
$68,234,234 

  
    
    
    
    
    
    
    
    
    
    
   

Stock-based compensation expense for the restricted stock units issued under stock incentive plan 
 -  
 -  
 -  
 -  
 986,048  
 -  
 -  
 -  
 -  
 -  
 986,048 

Allocation of J&B shares 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 31,365  
 31,365 

Allocation of Jerash Newtech shares 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 49,000  
 49,000 

Net loss 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 (2,005,902) 
 -  
 (36,024) 
 (2,041,926)

Dividend payments 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 (2,458,968) 
 -  
 -  
 (2,458,968)

Statutory Reserve 
 -  
 -  
 -  
 -  
 -  
 -  
 2,974  
 (2,974) 
 -  
 -  
 - 

Foreign currency translation loss 
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 -  
 (369,090) 
 -  
 (369,090)

  
 　  
    
    
    
    
    
    
    
    
    
   

Balance at March 31, 2024 
 -  
$-  
 12,534,318  
$12,534  
$23,917,094  
$(1,169,046) 
$413,821  
$41,704,238  
$(492,319) 
$44,341  
$64,430,663 

 
The
accompanying notes are an integral part of these consolidated financial statements. 
 

F-5
 

 
JERASH HOLDINGS (US), INC., 
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 


  
For the Fiscal Years Ended  March 31 

  
 2024  
 2023 

CASH FLOWS FROM OPERATING ACTIVITIES 
   
  

Net (loss) income 
$(2,041,926) 
$2,419,623 

Adjustments to reconcile net (loss) income to net cash provided by operating activities: 
    
   

Depreciation 
 2,539,736  
 2,430,692 

Stock-based compensation expenses 
 986,048  
 413,900 

Bad debt recovery 
 (187,762) 
 - 

Amortization of operating lease right-of-use assets 
 759,764  
 989,220 

  
    
   

Changes in operating assets: 
    
   

Accounts receivable 
 (2,989,214) 
 8,808,532 

Bills receivable 
 87,573  
 (87,573)

Inventories 
 5,415,260  
 (4,401,654)

Prepaid expenses and other current assets 
 187,140  
 285,782 

Advances to suppliers 
 (1,553,046) 
 (248,490)

Deferred tax assets 
 (4,456) 
 198,717 

Changes in operating liabilities: 
    
   

Accounts payable 
 557,667  
 942,345 

Accrued expenses 
 1,245,310  
 (185,421)

Other payables 
 757,627  
 (801,574)

Deferred revenue 
 (918,193) 
 928,393 

Operating lease liabilities 
 (824,043) 
 (977,584)

Income tax payable 
 (1,532,944) 
 92,226 

Net cash provided by operating activities 
 2,484,541  
 10,807,134 

  
    
   

CASH FLOWS FROM INVESTING ACTIVITIES 
    
   

Purchases of property, plant, and equipment 
 (1,241,226) 
 (722,770)

Payments for construction of properties 
 (3,600,948) 
 (5,084,044)

Acquisition of Ever Winland 
 -  
 (5,100,000)

Acquisition of Kawkab Venus 
 -  
 (2,200,000)

Payment for long-term deposits 
 (300,762) 
 (668,337)

Net cash used in investing activities 
 (5,142,936) 
 (13,775,151)

  
    
   

CASH FLOWS FROM FINANCING ACTIVITIES 
    
   

Dividend payments 
 (2,458,968) 
 (2,484,127)

Investment of noncontrolling interest 
 31,365  
 - 

Share repurchase 
 -  
 (1,169,046)

Repayment from short-term loan 
 (7,545,829) 
 (7,197,995)

Repayment to a related party 
 -  
 (300,166)

Proceeds from short-term loan 
 7,545,829  
 7,197,995 

Net cash used in financing activities 
 (2,427,603) 
 (3,953,339)

  
    
   

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH 
 (288,738) 
 (250,529)

  
    
   

NET DECREASE IN CASH AND RESTRICTED CASH 
 (5,374,736) 
 (7,171,885)

  
    
   

CASH AND RESTRICTED CASH, BEGINNING OF THE YEAR 
 19,411,603  
 26,583,488 

  
    
   

CASH AND RESTRICTED CASH, END OF THE YEAR 
$14,036,867  
$19,411,603 

  
    
   

CASH AND RESTRICTED CASH, END OF THE YEAR 
 14,036,867  
 19,411,603 

LESS: NON-CURRENT RESTRICTED CASH 
 1,608,498  
 1,609,989 

CASH, END OF THE YEAR 
$12,428,369  
$17,801,614 

  
    
   

Supplemental disclosure information: 
    
   

Cash paid for interest 
$1,203,596  
$768,131 

Income tax paid, net 
$2,253,410  
$1,747,635 

  
    
   

Non-cash investing and financing activities 
    
   

Equipment obtained by utilizing long-term deposit 
$354,917  
$237,412 

Acquisition of Kawkab Venus by utilizing long-term deposit 
$-  
$500,000 

Operating lease right of use assets obtained in exchange for operating lease obligations 
$1,058,820  
$190,654 

 
The
accompanying notes are an integral part of these consolidated financial statements. 

F-6
 

 
JERASH HOLDINGS (US), INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
 
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
 
Jerash Holdings (US), Inc. (“Jerash Holdings”)
was incorporated under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a holding company with no operations.
Jerash Holdings and its subsidiaries are herein collectively referred to as the “Company.”
 
Jerash Garments and Fashions Manufacturing Company
Limited (“Jerash Garments”) is a wholly owned subsidiary of Jerash Holdings and was established in Amman, the Hashemite Kingdom
of Jordan (“Jordan”), as a limited liability company on November 26, 2000 with a declared capital of 150,000 Jordanian Dinar
(“JOD”) (approximately US$212,000).
 
Jerash for Industrial Embroidery Company (“Jerash
Embroidery”) and Chinese Garments and Fashions Manufacturing Company Limited (“Chinese Garments”) were both established
in Amman, Jordan, as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with a declared capital of JOD
50,000. Jerash Embroidery and Chinese Garments are wholly owned subsidiaries of Jerash Garments.
 
Al-Mutafaweq Co. for Garments Manufacturing Ltd.
(“Paramount”) is a contract garment manufacturer that was established in Amman, Jordan, as a limited liability company on
October 24, 2004 with a declared capital of JOD 100,000. On December 11, 2018, Jerash Garments and the sole shareholder of Paramount entered
into an agreement pursuant to which Jerash Garments acquired all of the outstanding shares of stock of Paramount. Jerash Garments assumed
ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating
activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of June 18,
2019, Paramount became a subsidiary of Jerash Garments.
 
Jerash The First for Medical Supplies Manufacturing
Company Limited (“Jerash The First”) was established in Amman, Jordan, as a limited liability company on July 6, 2020, with
a registered capital of JOD 150,000. Jerash The First is engaged in the production of medical supplies in Jordan and is a wholly owned
subsidiary of Jerash Garments.
 
Mustafa and Kamal Ashraf Trading Company (Jordan)
for the Manufacture of Ready-Make Clothes LLC (“MK Garments”) is a garment manufacturer that was established in Amman, Jordan,
as a limited liability company on January 23, 2003 with a declared capital of JOD 100,000. On June 24, 2021, Jerash Garments and the sole
shareholder of MK Garments entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of MK Garments.
As of October 7, 2021, MK Garments became a subsidiary of Jerash Garments.
  
Kawkab Venus Dowalyah Lisenaet Albesah (“Kawkab
Venus”) was established in Amman, Jordan, as a limited liability company on January 15, 2015 with a declared capital of JOD 50,000.
It holds land with factory premises, which are leased to MK Garments. On July 14, 2021, Jerash Garments and the sole shareholder of Kawkab
Venus entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of Kawkab Venus. Apart from the
land and factory premises, Kawkab Venus had no other significant assets or liabilities and no operation activities or employees at the
time of acquisition, so the acquisition was accounted for an asset acquisition. As of August 21, 2022, Kawkab Venus became a subsidiary
of Jerash Garments.
 
Treasure Success International Limited (“Treasure
Success”) was organized on July 5, 2016 in Hong Kong, the People’s Republic of China (“China”), as a limited liability
company for the primary purpose of employing staff from China to support Jerash Garments’ operations and is a wholly owned subsidiary
of Jerash Holdings.
 
Ever Winland Limited (“Ever Winland”)
was organized in Hong Kong, China, as a limited liability company. It holds office premises, which are leased to Treasure Success. On
June 22, 2022, Treasure Success and the shareholders of Ever Winland entered into an agreement, pursuant to which Treasure Success acquired
all of the outstanding stock of Ever Winland. Apart from the office premises used by Treasure Success, Ever Winland had no other significant
assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for
as an asset acquisition. As of August 29, 2022, Ever Winland became a subsidiary of Treasure Success. 



F-7
 

 
NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS (CONTINUED)
 
J&B International Limited (“J&B”)
is a joint venture company established in Hong Kong on January 10, 2023. On March 20, 2023, Treasure Success and P. T. Eratex (Hong Kong)
Limited entered into a Joint Venture and Shareholders’ Agreement, pursuant to which Treasure Success acquired 51% of the equity
interests in J&B on April 11, 2023. The declared capital is HK$500,000 (approximately $64,000). J&B engages in the garment trading
and manufacturing business for orders from customers.
 
Jerash Newtech (Hong Kong) Holdings Limited (“Jerash
Newtech”) is a joint venture company established in Hong Kong on November 3, 2023. On October 10, 2023, Treasure Success and Newtech
Textile (HK) Limited entered into a Joint Venture and Shareholder’s Agreement to establish a new joint venture for the establishment
of a fabric facility in Jordan. On November 3, 2023, Jerash Newtech was established according to the aforementioned Joint Venture and
Shareholder’s Agreement. Treasure Success owns 51% of the equity interests in Jerash Newtech. The Company plans to invest approximately
$29.9 million to establish the fabric facility in Jordan. Treasure Success and Newtech Textile (HK) Limited will contribute capital in
two installments according to their respective shareholding proportions and conditions. The declared capital of Jerash Newtech is $100,000.
 
Jiangmen Treasure Success Business Consultancy
Company Limited (“Jiangmen Treasure Success”) was organized on August 28, 2019 under the laws of China in Guangzhou City of
Guangdong Province in China with a total registered capital of 15 million Hong Kong Dollars (“HKD”) (approximately $1.9 million)
to provide support in sales and marketing, sample development, merchandising, procurement, and other areas. Treasure Success owns 100%
of the equity interests in Jiangmen Treasure Success.
 
Jerash Supplies, LLC (“Jerash Supplies”)
was formed under the laws of the State of Delaware on November 20, 2020. Jerash Supplies is engaged in the trading of personal protective
equipment products and is a wholly owned subsidiary of Jerash Holdings. 
 
The Company is engaged primarily in the manufacturing
and exporting of customized, ready-made sportswear and outerwear and personal protective equipment (“PPE”) produced in its
facilities in Jordan and sold in the United States, Jordan, and other countries. 
 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation and Principles of Consolidation
 
The Company’s consolidated financial statements
are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and
pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
 
The consolidated financial statements include
the financial statements of Jerash Holdings, its wholly owned subsidiaries, and two non-wholly owned subsidiaries.
 
Non-wholly owned subsidiaries are entities that
the reporting parent entity does not own equity interests in full. Noncontrolling interest is evaluated with a depiction of the portion
of a non-wholly owned subsidiary’s net assets, net income, and net comprehensive income that is attributable to holders of equity
classified ownership interests other than the reporting parent entity. As mentioned in Note 1, the Company holds 51% of equity interest
in J&B and Jerash Newtech through its wholly owned subsidiary, Treasure Success. The Company consolidates J&B and Jerash Newtech
and reports noncontrolling interest to reflect the portion of their equity that is not attributable to the Company as the controlling
shareholder. As of March 31, 2024, noncontrolling interest was $44,341.
 
All significant intercompany balances and transactions have been eliminated
in consolidation.
 
Use of Estimates
 
The preparation of the consolidated financial
statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported
amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
 
Cash
 
The Company’s cash consists of cash on hand
and cash deposited in financial institutions. The Company considers all highly liquid investment instruments with an original maturity
of three months or less from the original date of purchase to be cash equivalents. As of March 31, 2024 and 2023, the Company had no cash
equivalents.
 
Restricted Cash
 
Restricted cash consists of cash used as security
deposits to obtain credit facilities from a bank and to secure customs clearance, labor import requirements, and other requirements of
local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security
deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a current asset
if the Company intends to terminate these bank facilities within one year, and as a non-current asset if otherwise. 



F-8
 

 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Accounts Receivable, Net
 
Accounts receivable are recognized and carried
at the original invoiced amount less an estimated allowance for credit loss. The Company usually grants extended payment terms to customers
with good credit standing and determines the adequacy of credit losses based on the historical level of credit losses, current economic
trends, and reasonable and supportable forecasts that affect the collectability of the future cash flows.
 
Inventories
 
Inventories are stated at the lower of cost or
net realizable value. Inventories include the cost of raw materials, freight, direct labor and related production overhead. The cost of
inventories is determined using the First-in, First-out method. The Company periodically reviews its inventories for excess or slow-moving
items and makes provisions as necessary to properly reflect inventory value.
 
Advance to Suppliers, Net
 
Advance to suppliers consists of balances paid
to suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materials
is short-term in nature. Advance to suppliers is reviewed periodically to determine whether its carrying value has become impaired. The
Company considers the assets to be impaired if the performance of the suppliers becomes doubtful. At each reporting date, the Company
generally determines the adequacy of impairment by evaluating all available information, and then records specific allowances for those
advances based on the specific facts and circumstances.
 
Credit Loss
 
On April 1, 2023, the Company adopted Accounting
Standards Update (“ASU”) 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses
on Financial Instruments,” by using a modified retrospective transition method, which replaces the incurred loss impairment methodology
with an expected loss methodology that is referred to as the current expected credit loss methodology. The expected credit loss impairment
model requires the entity to recognize its estimate of expected credit losses for affected financial assets using an allowance for credit
losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption
of ASU 2016-13 did not have a material impact on the Company’s financial statements.
 
The Company’s accounts receivable and other
receivables which are included in prepaid expenses and other current assets line item in the consolidated balance sheet are within the
scope of ASC Topic 326. The Company measures expected credit losses of account receivables and other receivables, on a collective basis
when similar risk characteristics exist. The Company makes estimates of expected credit and collectability trends for the allowance for
credit losses based upon assessment of various factors, including historical experience, the age of the receivables, creditworthiness
of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and
other factors that may affect its ability to collect from the customers and other debtors. The Company also provides specific provisions
for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.
 
Expected credit losses are included in general
and administrative expenses in the consolidated statements of income operations and comprehensive income (loss). After all attempts to
collect a receivable have failed, the receivable is written off against the allowance.
 
Property, Plant, and Equipment, net
 
Property, plant, and equipment are recorded at
cost, reduced by accumulated depreciation. Depreciation and amortization expense related to property, plant, and equipment is computed
using the straight-line method based on the estimated useful lives of the assets, or in the case of leasehold improvements, the shorter
of the initial lease term or the estimated useful life of the improvements. The useful life and depreciation method are reviewed periodically
to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property,
plant, and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows:
 


  
Useful life

Land 
Infinite

Property and buildings 
15-25 years

Equipment and machinery 
3-5 years

Office and electronic equipment 
3-5 years

Automobiles 
5 years

Leasehold improvements 
Lesser of useful life and lease term
 



F-9
 

 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Expenditures for maintenance and repairs, which
do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments
that substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of
assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of
operations and comprehensive income (loss).
 
Construction in Progress (“CIP”) is
recorded at cost for property, plant, and equipment where the asset is in construction or development. CIP accumulates the cost of construction
and transaction costs involved in the process of acquiring the materials for construction or development. The Company does not commence
depreciating the asset in the CIP account because the asset has not yet been placed in service. Once an asset is placed in service, all
costs associated with the asset that is recorded in the CIP account are transferred to property, plant, and equipment for the asset.
 
Impairment of Long-Lived Assets
 
The Company assesses its long-lived assets, including
property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group
may not be recoverable. Factors that may indicate potential impairment include a significant underperformance relative to the historical
or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that
asset. If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset.
The fair value is estimated based on the discounted future cash flows or comparable market values, if available. The Company did not record
any impairment loss during the fiscal years ended March 31, 2024 and 2023. 
 
Asset Acquisition 
 
An asset acquisition is an acquisition
of an asset, or a group of assets, that does not meet the definition of a business, as substantially all of the fair value of the gross
assets acquired are concentrated in a single or group of similar, identifiable assets. Asset acquisitions are accounted for by using the
cost accumulation model, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired
on a relative fair value basis. Determining and valuing intangible assets requires judgment.
 
Goodwill
 
Goodwill represents the excess purchase price
paid over the fair value of the net assets of acquired companies. Goodwill is not amortized. As of March 31, 2024 and 2023, the carrying
amount of goodwill was both $499,282. Goodwill is tested for impairment on an annual basis, or in interim periods if indicators of potential
impairment exist, based on the one reporting unit. The Company has the option to perform a qualitative assessment to determine whether
it is necessary to perform the quantitative goodwill impairment test. When performing the quantitative impairment test, the Company compares
the fair value of its only reporting unit with the carrying amounts. The Company would recognize an impairment charge for the amount by
which the carrying amount exceeds the reporting unit’s fair value. The Company concluded that no impairment of its goodwill occurred
for the fiscal years ended March 31, 2024 and 2023. 



F-10
 

 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Revenue Recognition
 
Substantially all of the Company’s revenue
is derived from product sales, which consist of sales of the Company’s customized ready-made outerwear for large brand-name retailers
and PPE. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term
when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year. Virtually
all of the Company’s contracts are short-term. The Company has minimal incremental costs of obtaining a contract, which are expensed
when incurred. The cost is normally immaterial. The Company recognizes revenue for the transfer of promised goods to customers in an amount
that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies
its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within 14
to 150 days of the invoice date. The contracts do not have significant financing components. Shipping and handling costs associated with
outbound freight from Jordan export dock are not an obligation of the Company. Returns and allowances are not a significant aspect of
the revenue recognition process as historically they have been immaterial.
 
The Company also derives revenue from rendering
cutting and making services to other apparel vendors who subcontract orders to the Company. Revenue is recognized when the service is
rendered. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price
is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, complete
satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales
returns have not significantly impacted the Company’s revenue.
 
The Company does not have any contract assets
since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment to
the accounts receivable from customers is not contingent on a future event. The Company had contract liabilities of $10,200 and $928,393
as of March 31, 2024 and 2023, respectively. For the fiscal years ended March 31, 2024 and 2023, there was no revenue recognized from performance
obligations satisfied in prior periods. As of March 31, 2024, $10,200 deferred revenue was expected to be recognized within fiscal 2025.
 
The Company has one revenue generating reportable
geographic segment under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its sales of customized ready-made
outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty
of its revenue and cash flows (see “Note 15—Segment Reporting”).
 
Shipping and Handling
 
Proceeds collected from customers for shipping
and handling costs are included in revenue. Shipping and handling costs are expensed as incurred and are included in operating expenses,
as a part of selling, general, and administrative expenses. Total shipping and handling expenses were $1,748,317 and $1,856,218 for the
fiscal years ended March 31, 2024 and 2023, respectively.
 
Income and Sales Taxes
 
The Company is subject to income taxes on an entity
basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings and Jerash Supplies
are incorporated/formed in the State of Delaware and are subject to federal income tax in the United States of America. Treasure Success,
Ever Winland, J&B and Jerash Newtech are registered in Hong Kong and are subject to profit tax in Hong Kong. Jiangmen Treasure Success
is incorporated in China and is subject to corporate income tax in China. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount,
Jerash The First, MK Garments, and Kawkab Venus are subject to income tax in Jordan, unless an exemption is granted. In accordance with
Development Zone law, Jerash Garments and its subsidiaries were subject to corporate income tax in Jordan at a rate of 18% plus a 1% social
contribution starting from January 1, 2022 to December 31, 2022. The income tax rate increased to 19% or 20% plus a 1% social contribution
starting from January 1, 2023. Effective January 1, 2024, the income tax rate increased to 20%, plus a 1% social contribution. 



F-11
 

 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Income and Sales Taxes (continued)
 
Jerash Garments and its subsidiaries are subject
to a local sales tax of 16% on purchases. Jerash Garments was granted a sales tax exemption from the Jordanian Investment Commission for
the period from June 1, 2015 to June 1, 2018, which allowed Jerash Garments to make purchases with no sales tax charge. The exemption
has been extended to February 5, 2025.
 
The Company accounts for income taxes in accordance
with ASC 740, “Income Taxes,” which requires the Company to use the asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying
enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of
existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred
income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is
recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.
 
ASC 740 clarifies the accounting for uncertainty
in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that
position is more likely than not to be sustained upon examination, based on the technical merits of the position. Recognized income tax
positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement
are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related
to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income (loss) and
comprehensive income (loss). No significant uncertainty in tax positions relating to income taxes was incurred during the fiscal years
ended March 31, 2024 and 2023.
 
Foreign Currency Translation
 
The reporting currency of the Company is the U.S.
dollar (“US$” or “$”). The Company uses JOD in Jordan companies, HKD in Treasure Success, Ever Winland, J&B,
and Jerash Newtech, and Chinese Yuan (“CNY”) in Jiangmen Treasure Success as functional currency of each above-mentioned entity.
The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheet date,
equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchange
rates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amounts
related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the
corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from
period to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and losses
that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in
the consolidated statements of operations and comprehensive income (loss) as incurred, and the total amount of transaction gains and losses
were immaterial as of the fiscal years ended March 31, 2024 and 2023.
 
The value of JOD against US$ and other currencies
may fluctuate and is affected by, among other things, changes in Jordan’s political and economic conditions. Any significant revaluation
of JOD, HKD, and CNY may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines
the currency exchange rates that were used in creating the consolidated financial statements in this report:
 


  
 March 31, 
2024  
 March 31, 
2023 

Period-end spot rate 
 US$1=JOD0.7090  
 US$1=JOD0.7090 

  
 US$1=HKD7.8243  
 US$1=HKD7.8496 

  
 US$1=CNY7.2190  
 US$1=CNY6.8666 

Average rate 
 US$1=JOD0.7090  
 US$1=JOD0.7090 

  
 US$1=HKD7.8240  
 US$1=HKD7.8383 

  
 US$1=CNY7.1501  
 US$1=CNY6.8506 
 



F-12
 

 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Stock-Based Compensation
 
The Company measures compensation expense for
stock-based awards based upon the awards’ initial grant-date fair value. The estimated grant-date fair value of the award is recognized
as expense over the requisite service period using the straight-line method.
 
The Company estimates the fair value of stock
options using a Black-Scholes model. This model is affected by the Company’s stock price on the date of the grant as well as assumptions
regarding a number of variables. These variables include the expected term of the option, expected risk-free rates of return, the expected
volatility of the Company’s common stock, and expected dividend yield, each of which is more fully described below. The assumptions
for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value.
 

●Expected Term: the expected
term of a warrant or a stock option is the period of time that the warrant or a stock option is expected to be outstanding.

 

●Risk-free Interest Rate: the
Company bases the risk-free interest rate used in the Black-Scholes model on the implied yield at the grant date of the U.S. Treasury
zero-coupon issued with an equivalent term to the stock-based award being valued. Where the expected term of a stock-based award does
not correspond with the term for which a zero-coupon interest rate is quoted, the Company uses the nearest interest rate from the available
maturities.

 


 
●
Expected Stock Price Volatility: the Company utilizes the expected volatility of the Company’s common stock over the same period of time as the life of the warrant or stock option. When the Company’s own stock volatility information is unavailable for such a period of time, the Company utilizes comparable public company volatility.

 


 
●
Dividend Yield: Stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards will be valued using the anticipated dividend yield.

 
Earnings or Loss per Share
 
The Company computes earnings per share (“EPS”)
in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital
structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding
for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per-share basis of potential common shares (e.g.,
convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date,
if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share)
are excluded from the calculation of diluted EPS (See “Note 14–(Loss) Earnings per Share”).
 
Comprehensive Income or Loss
 
Comprehensive income or loss consists of two components,
net income or loss and other comprehensive income or loss. The foreign currency translation gain or loss resulting from translations of
the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income or loss in the consolidated statements
of operations and comprehensive income (loss). 



F-13
 

 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Fair Value of Financial Instruments
 
ASC 825-10 requires certain disclosures regarding
the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes
the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of
unobservable inputs. The three levels of inputs used to measure fair value are as follows:
 


 
●
Level 1 - Quoted prices in active markets for identical assets and liabilities.

 


 
●
Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 


 
●
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

 
The Company considers the recorded value of its
financial assets and liabilities, which consist primarily of cash, accounts receivable, bills receivables, other current assets, credit
facilities, accounts payable, accrued expenses, income tax payables, other payables and operating lease liabilities to approximate the
fair value of the respective assets and liabilities at March 31, 2024 and 2023 based upon the short-term nature of these assets and liabilities.
 
Concentrations and Credit Risk
 
Credit risk
 
Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist primarily of cash. As of March 31, 2024 and 2023, respectively, $6,547,090
and $7,264,247 of the Company’s cash were on deposit at financial institutions in Jordan, where there currently is no rule or regulation
requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of March 31, 2024
and 2023, respectively, $518,485 and $172,939 of the Company’s cash was on deposit at financial institutions in China. Cash maintained
in banks within China of less than CNY0.5 million (equivalent to $69,262) per bank is covered by “deposit insurance regulation”
promulgated by the State Council of the People’s Republic of China. As of March 31, 2024 and 2023, respectively, $6,682,404 and
$11,700,512 of the Company’s cash were on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit
Protection Board subject to certain limitations. While management believes that these financial institutions are of high credit quality,
it also continually monitors their creditworthiness. As of March 31, 2024 and 2023, respectively, $267,954 and $171,496 of the Company’s
cash were on deposit in the United States and are insured by the Federal Deposit Insurance Corporation up to $250,000.
 
Accounts receivable are typically unsecured and
derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company’s assessment
of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.
 
Customer and vendor concentration risk
 
The Company’s sales are made primarily in
the United States. Its operating results could be adversely affected by U.S. government policies on importing business, foreign exchange
rate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specific
customers and suppliers. For the fiscal year ended March 31, 2024 and 2023, two customers accounted for 67% and 12%, and 60% and 17% of
the Company’s total revenue, respectively. As of March 31, 2024, four end-customers accounted for 23%, 23%, 10%, and 10%, respectively,
of the Company’s total accounts receivable balance. As of March 31, 2023, four end-customers accounted for 50%, 13%, 10%, and 10%,
respectively, of the Company’s total accounts receivable balance. 



F-14
 

 
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
For the fiscal years ended March 31, 2024 and
2023, the Company purchased approximately 10% and 11%, respectively, of its total purchase from one major garment supplier. As of March
31, 2024, accounts payable to the Company’s two major suppliers accounted for 22% and 13% of the total accounts payable balance,
respectively. As of March 31, 2023, accounts payable to the Company’s one major supplier accounted for 36% of the total accounts
payable balance, respectively.
 
Risks and Uncertainties
 
The principal operations of the Company are located
in Jordan. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic,
and legal environments in Jordan, as well as by the general state of the Jordanian economy. The Company’s operations in Jordan are
subject to special considerations and significant risks not typically associated with companies in North America. These include risks
associated with, among others, the political, economic, and legal environment, foreign currency exchange, and the recent conflict between
Israel and Hamas. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions
in Jordan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws
and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. 
 
Since the inception of the turmoil in the Middle
East, the Company has been closely monitoring the situation and keeping its customers informed. Currently, production is ongoing as usual,
with no changes to customer orders or commitments, and both ports that the Company uses for import and export, in Aqaba and Haifa, are
operating normally. In order to provide flexibility, the Company has also begun using the Port of Jebel Ali in the United Arab Emirates
as an alternative route for raw material import since December 2023. However, in the event of any potential impact on the ports, the Company
has prepared a contingency plan, approved by its major customers, to temporarily relocate production to alternate regions.
 
Reclassification
 
Certain prior period amounts have been reclassified
to conform to the current period presentation. Such reclassifications had no effect on net income or cash flow as previously reported.
 
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
 
In June 2016, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments—Credit
Losses,” which will require the measurement of all expected credit losses for financial assets held at the reporting date based
on historical experience, current conditions, and reasonable and supportable forecasts. Subsequently, the FASB issued ASU No. 2018-19,
Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting
standards. Further, the FASB issued ASU No. 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, and ASU 2020-02 to provide additional guidance
on the credit losses standard. For the Company as an emerging growth company, the amendments for ASU 2016-13 are effective for fiscal
years beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASUs is on a modified retrospective
basis. The Company has adopted this ASU since April 1, 2023. The Company considers the impact on its consolidated financial statements
and related disclosures to be immaterial.
 
In December 2023, the FASB issued ASU 2023-09,
“Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which modifies the rules on income tax disclosures to
require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income
taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making
capital allocation decisions. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.
ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating
the potential impact of adopting this new guidance on its consolidated financial statements and related disclosures. 


F-15
 

 
In November 2023, the FASB issued ASU 2023-07,
“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment
disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the amendment is to
enable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective
for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early
adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Based on
management’s assessment, the Company has determined that it has only one operating segment as defined by ASC 280.
 
Except for the above-mentioned pronouncements,
there are no new recently issued accounting standards that will have a material impact on the consolidated financial position, statements
of operations, and cash flows.
 
NOTE 4 – ACCOUNTS RECEIVABLE, NET
 
Accounts receivable consisted of the following:
 


  
As of  
As of 

  
March 31, 2024  
March 31, 2023 

Trade accounts receivable 
$5,451,334  
$2,462,120 

Less: allowances for credit loss 
 33,821  
 221,583 

Accounts receivable, net 
$5,417,513  
$2,240,537 

 
NOTE 5 – INVENTORIES
 
Inventories consisted of the following:
 


  
As of  
As of 

  
March 31, 2024  
March 31, 2023 

Raw materials 
$14,664,823  
$15,240,198 

Work-in-progress 
 3,097,031  
 2,932,519 

Finished goods 
 9,479,719  
 14,484,116 

Total inventory 
$27,241,573  
$32,656,833 

 
As of March 31, 2024 and 2023, the Company had
$nil inventory valuation reserve as the Company arranged its inventory based on 99.9% and 93.4% with actual orders received, respectively.
0.1% and 6.6% of inventories held on hand were associated with unfulfilled sales orders, respectively.
 
NOTE 6 – ADVANCE TO SUPPLIERS, NET
 
Advance to suppliers consisted of the following:
 


  
As of  
As of 

  
March 31, 2024  
March 31, 2023 

Advance to suppliers 
$3,086,137  
$1,533,091 

Less: allowances for credit loss 
 -  
 - 

Advance to suppliers, net 
$3,086,137  
$1,533,091 

 
NOTE 7 – LEASES
 
The Company has 45 operating leases for manufacturing
facilities and offices. Some leases include one or more options to renew, which is typically at the Company’s sole discretion. The
Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will include the renewal period in
its lease term. New lease modifications result in measurement of the right of use (“ROU”) assets and lease liability. The
Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. ROU assets and
related lease obligations are recognized at the commencement date based on the present value of remaining lease payments over the lease
term.
 
All of the Company’s leases are classified as operating leases
and primarily include office space and manufacturing facilities. 



F-16
 

 
NOTE 7 – LEASES (CONTINUED)
 
Supplemental balance sheet information related to operating leases
was as follows:
 


  
March 31,  2024 

Operating lease right of use assets 
$1,259,395 

  
   

Operating lease liabilities – current 
$370,802 

Operating lease liabilities – non-current 
 618,302 

Total operating lease liabilities 
$989,104 

 
The weighted average remaining lease terms and
discount rates for all of operating leases were as follows as of March 31, 2024:
 
  Remaining lease term and discount rate:             Weighted average remaining lease term (years)   2.4           Weighted average discount rate   6.10% 
 
During the fiscal years ended March 31, 2024 and
2023, the Company incurred total operating lease expenses of $2,561,861 and $2,696,593, respectively.
 
The following is a schedule, by fiscal years, of maturities of lease
liabilities as of March 31, 2024:
 


2025 
$599,970 

2026 
 475,019 

2027 
 275,443 

2028 
 9,281 

2029 
 — 

Thereafter 
 — 

Total lease payments 
 1,359,713 

Less: imputed interest 
 (100,318)

Less: prepayments 
 (270,291)

Present value of lease liabilities 
$989,104 

 
NOTE 8 – PROPERTY, PLANT, AND EQUIPMENT, NET
 
Property, plant, and equipment, net consisted of the following: 
 


  
As of  
As of 

  
March 31, 2024  
March 31, 2023 

Land(3) 
$2,200,334  
$2,200,334 

Property and buildings(3) 
 10,540,962  
 9,308,426 

Equipment and machinery 
 12,529,813  
 11,853,445 

Office and electric equipment 
 1,086,203  
 992,735 

Automobiles 
 1,333,823  
 871,756 

Leasehold improvements 
 4,380,202  
 4,088,980 

Subtotal 
 32,071,337  
 29,315,676 

Construction in progress (1)(2) 
$9,550,778  
 7,182,367 

Less: Accumulated depreciation and amortization 
 (16,624,019) 
 (14,142,469)

Property, plant, and equipment, net 
$24,998,096  
$22,355,574 

 
  (1) In January 2022, the Company commenced a construction project of an expansion of the Company’s own premises in Al Tajamouat Industrial City, Jordan. Through December 31, 2023, the Company had paid approximately JOD 874,000 (approximately $1,233,000). The project was completed and the Company started to use it in July 2023.    



F-17
 

 
NOTE 8 – PROPERTY, PLANT, AND EQUIPMENT,
NET (CONTINUED)
 
  (2) In April 2022, the Company commenced a construction project to build
a dormitory for employees. The construction is built on a land of 4,516 square meters (approximately 48,608 square feet) in Al Tajamouat
Industrial City, Jordan, which was acquired by the Company in 2020. Through March 31, 2024, the Company had spent approximately JOD 6.6
million (approximately $9.3 million) for the dormitory construction. Dormitory’s kitchen is under construction at an estimated cost
of JOD 650,000 (approximately $920,000), and approximately JOD 195,000 (approximately $274,000) has been spent. The dormitory is expected
to be fully completed in second quarter of fiscal year 2025. 
 
  (3) In August 2022, the Company completed the acquisitions of Ever Winland and Kawkab Venus. Ever Winland holds office premises of HKD 39.6 million (approximately $5.1 million), which are classified as property and buildings. Kawkab Venus holds land with factory premises, which are classified as land and property and buildings of approximately $370,000 and approximately $2.3 million, respectively. Ever Winland and Kawkab Venus only contain fixed assets (buildings and land) and neither of these two entities had any other assets or liabilities, operations, or employees as of their respective acquisition dates, so the acquisitions of Ever Winland and Kawkab Venus were accounted as asset acquisitions. 
 
For the fiscal year ended March 31, 2024 and 2023,
depreciation expenses were $2,539,736 and $2,430,692, respectively.
 
NOTE 9 – EQUITY
 
Preferred Stock
 
The Company has 500,000 shares of preferred stock,
par value of $0.001 per share, authorized; none were issued and outstanding as of March 31, 2024 and 2023. The preferred stock can be
issued by the Board of Directors of Jerash Holdings (the “Board of Directors”) in one or more classes or one or more series
within any class, and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations,
preferences, rights, qualifications, limitations, or restrictions of such rights as the Board of Directors may determine from time to
time.
 
Common Stock
 
The Company had 12,294,840 shares of common stock
outstanding as of March 31, 2024 and 2023.
 
On June 24, 2021, the Board of Directors approved
the grant of 200,000 Restricted Stock Units (“RSUs”) under the Plan to 32 executive officers and employees of the Company,
with a one-year vesting period. All RSUs were vested and 200,000 additional shares were issued on June 30, 2022.
 
On June 13, 2022, the Board of Directors authorized
a share repurchase program, under which the Company may repurchase up to $3.0 million of its outstanding shares of common stock. The share
repurchase program was effective through March 31, 2023. As of March 31, 2024, 239,478 shares had been repurchased at market rate with
a total consideration of $1,169,046. 
 
Statutory Reserve
 
In accordance with the Corporate Law in Jordan,
Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, and MK Garments and Kawkab Venus are required to make
appropriations to certain reserve funds, based on net income determined in accordance with generally accepted accounting principles of
Jordan. Appropriations to the statutory reserve are required to be 10% of net income until the reserve is equal to 100% of the entity’s
share capital. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least
10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of
their registered capital. The statutory reserves are not distributable in the form of cash dividends to the Company and can be used to
make up cumulative prior-year losses.
 
Dividends
 
During the fiscal year ended March 31, 2024, the
Board of Directors declared a cash dividend of $0.05 per share of common stock on February 5, 2024, November 3, 2023, August 4, 2023,
and May 23, 2023, respectively. Four cash dividends of $614,742 each were paid in full on February 16, 2024, November 28, 2023, August
23, 2023, and June 9, 2023, respectively.
 
During the fiscal year ended March 31, 2023, the
Board of Directors declared a cash dividend of $0.05 per share of common stock on February 3, 2023, November 4, 2022, August 5, 2022,
and May 16, 2022, respectively. The cash dividends of $618,886, $621,809, $626,716, and $616,716 were paid in full on February 21, 2023,
November 28, 2022, August 24, 2022, and June 3, 2022, respectively.
 


F-18
 

 
NOTE 10 – STOCK-BASED COMPENSATION
 
Warrants issued for services
 
From time to time, the Company issues warrants
to purchase its common stock. These warrants are valued using the Black-Scholes model and using the volatility, market price, exercise
price, risk-free interest rate, and dividend yield appropriate at the date the warrants were issued. The major assumptions used in the
Black Scholes model include: (i) an expected term of five years; (ii) a risk-free interest rate of 1.8% to 2.8%; and (iii) an expected
volatility of 50.3% to 52.2%. All of the outstanding warrants were fully vested. 137,210 and 57,200 warrants expired in fiscal 2023 and
2024, respectively.
 
All stock warrants activities are summarized as follows:
 


  
Option to  
Weighted  Average 

  
Acquire Shares  
Exercise Price 

Stock warrants outstanding at March 31, 2023 
 57,200  
$8.75 

Granted 
 -  
 - 

Exercised 
 -  
 - 

Expired 
 (57,200) 
 8.75 

Stock warrants outstanding at March 31, 2024 
 -  
$- 

 
Stock Options
 
On March 21, 2018, the Board of Directors adopted
the Jerash Holdings (US), Inc. 2018 Stock Incentive Plan (the “Plan”), pursuant to which the Company may grant various types
of equity awards. 1,484,250 shares of common stock of the Company were reserved for issuance under the Plan. In addition, on July 19,
2019, the Board of Directors approved an amendment and restatement of the Plan, which was approved by the Company’s stockholders
at its annual meeting of stockholders on September 16, 2019. The amended and restated Plan increased the number of shares reserved for
issuance under the Plan by 300,000, to 1,784,250, among other changes. On March 31, 2024, the Company had 114,110 of shares remaining
available for future issuance under the Plan.
  
All stock option activities are summarized as
follows:
 


  
Option to  
Weighted  Average 

  
Acquire  Shares  
Exercise Price 

Stock options outstanding at March 31, 2023 
 1,136,500  
$6.90 

Granted 
 -  
 - 

Exercised 
 -  
 - 

Expired 
 (986,500) 
 7.00 

Stock options outstanding at March 31, 2024 
 150,000  
$6.25 

 
All these outstanding options were fully vested
in three equal six-month installments and exercisable. As of March 31, 2024, there were 986,500 stock options expired and 150,000 stock
options outstanding. The remaining stock options have 10-year term and the weighted average remaining life of the options is 4.8 years. 



F-19
 

 
NOTE 10 – STOCK-BASED COMPENSATION (CONTINUED)
 
Restricted Stock Units
 
On June 24, 2021, the Board of Directors approved
the grant of 200,000 RSUs under the Plan to 32 executive officers and employees of the Company, with a one-year vesting period. The fair
value of these RSUs on June 24, 2021 was $1,266,000, based on the market price of the Company’s common stock as of the date of the
grant. On June 30, 2022, all 200,000 RSUs were vested.
 
On February 9, 2023, the Board of Directors approved
the grant of 405,800 RSUs under the Plan to 37 executive officers and employees of the Company, with a two-year vesting period. The fair
value of these RSUs on February 15, 2023 was $1,937,695, based on the market price of the Company’s common stock as of the date
of the grant. As of March 31, 2024, there were $846,775 unrecognized stock-based compensation expenses to be recognized to February 2025
and 405,100 RSUs remained.
 
On March 25, 2024, the Board of Directors approved
the grant of 915,040 RSUs under the Plan to 35 executive officers and employees of the Company, with a three-year vesting period. The
fair value of these RSUs on March 25, 2024 was $2,745,120, based on the market price of the Company’s common stock as of the date
of the grant. As of March 31, 2024, there were $2,727,571 unrecognized stock-based compensation expenses to be recognized to March 2027
and 915,040 RSUs remained.
 
RSU activities are summarized as follows:
 


  
Number of Shares  
Weighted- Average Grant Date Fair Value Per Share 

RSU outstanding at March 31, 2023 
 405,100  
$4.78 

Granted 
 915,040  
$3.00 

Vested 
 -  
 - 

Forfeited 
 -  
 - 

RSU outstanding at March 31, 2024 
 1,320,140  
$3.55 

 
Total expenses related to the RSU issued were
$986,048 and $413,900 for the fiscal years ended March 31, 2024 and 2023, respectively.
 
NOTE 11 – RELATED PARTY TRANSACTIONS
 
The relationship and the nature of related party
transactions are summarized as follow:
 
  Name of Related Party  Relationship to the Company  Nature of Transactions           Yukwise Limited (“Yukwise”)  Wholly owned by the Company’s President, Chief Executive Officer, Chairman, and a significant stockholder  Consulting Services           Multi-Glory Corporation Limited  (“Multi-Glory”)  Wholly owned by a significant stockholder  Consulting Services 
 
Consulting agreements
 
On January 12, 2018, Treasure Success and Yukwise
entered into a consulting agreement, pursuant to which Mr. Choi will serve as Chief Executive Officer and provide high-level advisory
and general management services for $300,000 per annum. The agreement renews automatically for one-month terms. This agreement became
effective as of January 1, 2018. Total consulting fees under this agreement were $300,000 for the fiscal years ended March 31, 2024 and
2023.
 
On January 16, 2018, Treasure Success and Multi-Glory
entered into a consulting agreement, pursuant to which Multi-Glory will provide high-level advisory, marketing, and sales services to
the Company for $300,000 per annum. The agreement renews automatically for one-month terms. The agreement became effective as of January
1, 2018. Total consulting fees under this agreement were $300,000 for the fiscal years ended March 31, 2024 and 2023.
 


F-20
 

 
NOTE 12 – CREDIT FACILITIES
 
On January 31, 2019, Standard Chartered Bank (Hong
Kong) Limited (“SCBHK”) offered to provide an import facility of up to $3.0 million to Treasure Success pursuant to a facility
letter dated June 15, 2018. Pursuant to the agreement, SCBHK agreed to finance import invoice financing and pre-shipment financing of
export orders up to an aggregate of $3.0 million. The SCBHK facility bears interest at 1.3% per annum over SCBHK’s cost of funds.
As of March 31, 2024 and 2023, the Company had $nil outstanding amount in import invoice financing under the SCBHK facility. In June 2022,
the Company was informed by SCBHK that the facility was cancelled due to persistently low usage and zero loan outstanding.
 
Starting from May and October 2021, the Company
has participated in a financing program with two customers, in which the Company may receive early payments for approved sales invoices
submitted by the Company through the bank the customer cooperates with. For any early payments received, the Company is subject to an
early payment charge imposed by the customer’s bank, for which the rate is revised based on Secured Overnight Financing Rate (“SOFR”)”)
plus a spread. In certain scenarios, the Company submits the sales invoice and receives payments prior to the shipment of the relative
products. In that case, instead of recording the cash receipts as a reduction to accounts receivables, the Company records the cash receipts
as receipts in advance from a customer until products are entitled to transfer. The Company records the early payment charge in interest
expenses on the consolidated statements of operations and comprehensive income (loss). For the fiscal years ended March 31, 2024 and 2023,
the early payment charge was $1,122,019 and $647,906, respectively.
 
On January 12, 2022, DBS Bank (Hong Kong) Limited
(“DBSHK”) offered to provide a banking facility of up to $5.0 million to Treasure Success pursuant to a facility letter dated
January 12, 2022, which was amended pursuant to a facility letter dated January 4, 2024. Pursuant to the amended facility, DBSHK agreed
to finance cargo receipt, trust receipt, account payable financing, and certain types of import and export invoice financing up to an
aggregate of $5.0 million, with certain financial covenants. The DBSHK facility bears interest at 1.5% per annum over Hong Kong Interbank
Offered Rate for HKD bills and 1.1% to 1.3% per annum over DBSHK’s cost of funds for foreign currency bills. The facility is guaranteed
by Jerash Holdings and became available to the Company on June 17, 2022.
 
As of March 31, 2024 and 2023, the Company had
$nil outstanding amount under the DBSHK facility. The DBSHK facility is reviewed annually.
 
On June 1, 2023, the Company received documents
from Capital Bank of Jordan for a credit facility of $10 million, and entered into the credit facility after reviewing the documents.
Execution is still in process and the credit facility is not effective as of the date of this Annual report.
 
NOTE 13 – NONCONTROLLING INTEREST
 
On March 20, 2023, Treasure Success and P.T. Eratex
(Hong Kong) Limited entered into a Joint Venture and Shareholders’ Agreement, pursuant to which Treasure Success and P.T Eratex
(Hong Kong) Limited acquired 51% and 49% of the equity interest in J&B, respectively, on April 11, 2023.
 
On October 10, 2023, Treasure Success and Newtech
Textile (HK) Limited entered into a Joint Venture and Shareholders’ Agreement, pursuant to which Treasure Success and Newtech Textile
(HK) Limited acquired 51% and 49% of the equity interest in Jerash Newtech, respectively, on November 3, 2023.
 
The net loss generated by J&B and Jerash Newtech was $66,836 and
$6,682 for the fiscal year ended March 31, 2024, respectively. Noncontrolling interest as of March 31, 2024 in J&B and Jerash Newtech
was -$1,385 and $45,726, respectively.
 


F-21
 

 
NOTE 14 – (LOSS) EARNINGS PER SHARE
 
The following table sets forth the computation
of basic and diluted (loss) earnings per share for the fiscal years ended March 31, 2024 and 2023. As of March 31, 2024, 1,470,140 RSUs
and stock options were outstanding. For the fiscal year ended March 31, 2024, all RSUs and stock options were excluded from the EPS calculation
as the result would be anti-dilutive. For the fiscal year ended March 31, 2023, 1,193,700 warrants and stock options were excluded from
the EPS calculation, respectively, as they were anti-dilutive.
 


  
Fiscal Year Ended 

  
March 31, 

  
(in $000s except share and 

  
per share information) 

  
2024  
2023 

Numerator: 
　  
　 

Net (loss) income attributable to Jerash Holdings (US), Inc.’s Common Stockholders 
$(2,005) 
$2,420 

  
 　  
 　 

Denominator: 
 　  
 　 

Denominator for basic earnings per share (weighted-average shares) 
 12,294,840  
 12,635,785 

Dilutive securities – unexercised warrants and options 
 -  
 39,566 

Denominator for diluted earnings per share (adjusted weighted-average shares) 
 12,294,840  
 12,675,351 

Basic and diluted (loss) earnings per share 
$(0.16) 
$0.19 

 
NOTE 15 – SEGMENT REPORTING
 
ASC 280, “Segment Reporting,” establishes
standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure
as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s
business segments. The Company uses the “management approach” in determining reportable operating segments. The management
approach considers the internal organization and reporting used by the Company’s chief operating decision-maker for making operating
decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief
operating decision maker, reviews operation results by the revenue of the Company’s products. The Company’s major product
is outerwear. For the fiscal years ended March 31, 2024 and 2023, outerwear accounted for approximately 90.1% and 94.1% of total revenue,
respectively. Based on management’s assessment, the Company has determined that it has only one operating segment as defined by
ASC 280.
 
The following table summarizes sales by geographic
areas for the fiscal years ended March 31, 2024 and 2023, respectively.
 


  
For the Fiscal Year Ended March 31, 

  
2024  
2023 

United States 
$102,520,412  
$122,318,376 

Hong Kong 
 5,208,334  
 9,474,112 

Germany 
 2,919,845  
 74,063 

Jordan 
 2,179,492  
 4,891,883 

Others 
 4,359,257  
 1,304,875 

Total 
$117,187,340  
$138,063,309 

 
74.4% and 24.9% of long-lived assets were located
in Jordan and Hong Kong, respectively, as of March 31, 2024.
 


F-22
 

 
NOTE 16 - COMMITMENTS AND CONTINGENCIES
 
Commitments
 
On August 28, 2019, Jiangmen Treasure Success
was incorporated under the laws of the People’s Republic of China in Jiangmen City, Guangdong Province, China, with a total registered
capital of HKD 3 million (approximately $385,000). On December 9, 2020, shareholders of Jiangmen Treasure Success approved to increase
its registered capital to HKD 15 million (approximately $1.9 million). The Company’s subsidiary, Treasure Success, as a shareholder
of Jiangmen Treasure Success, is required to contribute HKD 15 million (approximately $1.9 million) as paid-in capital in exchange for
100% ownership interest in Jiangmen Treasure Success. As of March 31, 2024, Treasure Success had made a capital contribution of HKD 10
million (approximately $1.3 million). Pursuant to the articles of incorporation of Jiangmen Treasure Success, Treasure Success is required
to complete the remaining capital contribution before December 31, 2029 as Treasure Success’ available funds permit.
 
Contingencies
 
From time to time, the Company is a party to various
legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable
and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s
management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would not
have a material adverse impact on the Company’s consolidated financial position, results of operations, and cash flows.
  
NOTE 17 – INCOME TAX 
 
Jerash Garments, Jerash Embroidery, Chinese Garments,
Paramount, Jerash the First, MK Garments, and Kawkab Venus are subject to the regulations of the Income Tax Department in Jordan. Effective
January 1, 2019, the Jordanian government reclassified the area where Jerash Garments and its subsidiaries are to a Development Zone.
In accordance with the Development Zone law, Jerash Garments and its subsidiaries were subject to income tax at an income tax rate of
18% or 20% plus a 1% social contribution between January 1, 2022 and December 31, 2022. The income tax rate increased to 19% or 20% plus
a 1% social contribution starting from January 1, 2023. Effective January 1, 2024, the income tax rate increased to 20%, plus a 1% social
contribution.
 
On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax
Act”) was enacted. The Tax Act imposed a tax on previously untaxed accumulated earnings and profits (“E&P”) of foreign
subsidiaries (the “Toll Charge”). The Toll Charge is based in part on the amount of E&P held in cash and other specific
assets as of December 31, 2017. The Toll Charge can be paid over an eight-year period, starting in 2018, and will not accrue interest.
As of March 31, 2024, the Company has two years of installments remaining with total amounting to $751,410. Additionally, under the provisions
of the Tax Act, for taxable years beginning after December 31, 2017, the foreign earnings of Jerash Garments and its subsidiaries are
subject to U.S. taxation at the Jerash Holdings level under the new Global Intangible Low-Taxed Income (“GILTI”) regime. 



F-23
 

 
NOTE 17 – INCOME TAX (CONTINUED)
 
The provision for income taxes consisted of the
following:
 


  
For the fiscal years ended  March 31, 

  
2024  
2023 

Domestic
                                            and foreign components of (loss) income before income taxes 
   
  

Domestic 
$(2,189,825) 
$(1,761,439)

Foreign 
 820,394  
 5,845,172 

Total 
$(1,369,431) 
$4,083,733 

 


  
For the fiscal years ended  March 31, 

  
2024  
2023 

Provision (benefit) for income taxes 
   
  

Current tax: 
   
  

U.S. federal 
$—  
$— 

U.S. state and local 
 750  
 750 

Foreign 
 676,201  
 1,464,643 

Total Current Tax 
 676,951  
 1,465,393 

Deferred tax: 
    
   

U.S. federal 
 (4,456) 
 198,717 

Total deferred tax 
 (4,456) 
 198,717 

Total tax 
$672,495  
$1,664,110 

  
    
   

Effective tax rates 
 -49.1% 
 40.7%
 



F-24
 

 
NOTE 17 – INCOME TAX (CONTINUED)
 
A reconciliation of the effective tax rate was as follows:
 


  
For the fiscal years ended March 31, 

  
2024  
2023 

Tax at statutory rate 
$(287,581) 
$857,052 

State tax, net of federal benefit 
 593  
 593 

Non-deductible expenses 
 202,789  
 85,589 

Non-taxable income 
 —  
 — 

Global Intangible Low-Taxed Income, (net) 
 527,733  
 846,116 

Tax Credits 
 (274,877) 
 (558,642)

Foreign tax rate differential 
 503,917  
 237,688 

Foreign tax attributes 
 (793,383) 
 (1,372,649)

Change in Valuation Allowance 
 793,383  
 1,372,649 

Provision to return adjustments 
 (79) 
 195,714 

Total 
$672,495  
$1,664,110 

 
The Company’s deferred tax assets and liabilities
as of March 31, 2024 and 2023 consisted of the following:
 


Deferred tax assets 
As of March 31,  2024  
As of March 31, 2023 

Stock-based compensation 
$158,557  
$154,227 

Deferred tax liabilities 
 (228) 
 (354)

Net operating losses carried forward 
 2,166,032  
 1,372,649 

Less: valuation allowance 
 (2,166,032) 
 (1,372,649)

Deferred tax assets, net 
$158,329  
$153,873 

 
Deferred tax assets are reduced by a valuation
allowance when it is considered more likely than not that some portion or all of the deferred tax assets will not be realized. As of March
31, 2024 and 2023, the allowance for deferred tax assets was $2,166,032 and $1,372,649 respectively. The allowance is provided for net
operating loss of foreign subsidiaries. For comparison purposes, the Company retrospectively revised the presentation of net operating
loss as of March 31, 2023, which had been fully reserved and thus has no impact on the financial statements as a whole.
 
As of March 31, 2024, the Company had cumulative
book-tax basis differences in its foreign subsidiaries of approximately $15.0 million. The Company has not recorded a U.S. deferred tax
liability for the book-tax basis in its foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations.
The reversal of this temporary difference would occur upon the sale or liquidation of the Company’s foreign subsidiaries, and the
estimated impact of the reversal of this temporary difference is approximately $3.2 million. As of March 31, 2024 and 2023, there were no
uncertain tax positions.
 
The Company files income tax returns in the U.S.
federal, state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S.
income tax examinations by tax authorities for years prior to April 1, 2017.
 
NOTE 18 – SUBSEQUENT EVENTS
 
On May 21, 2024, the Board of Directors approved
the payment of a dividend of $0.05 per share, payable on June 7, 2024, to stockholders of record as of the close of business as of May
31, 2024.
 


F-25
 

 
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
 
There has been no change in independent accountants
for our Company during the two most recent fiscal years or any subsequent interim period except as previously reported in our Current
Report on Form 8-K filed with the SEC on September 23, 2022. There have been no disagreements of the type required to be disclosed by
Item 304(b) of Regulation S-K.
 
Item 9A. Controls and Procedures.
 
Disclosure Controls and Procedures
 
Disclosure controls and procedures (as defined
in Exchange Act Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the
SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information
is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure.
 
Our Chief Executive Officer (principal executive
officer) and Chief Financial Officer (principal financial officer), based on their evaluation of our disclosure controls and procedures
as of March 31, 2024, concluded that our disclosure controls and procedures were ineffective as described below in the Internal Control
over Financial Reporting section.
 
Internal Control Over Financial Reporting
 
Management’s annual report on internal
control over financial reporting 
 
Our management is responsible for establishing
and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
 
Our management, with the participation of our
Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has assessed the effectiveness
of our internal control over financial reporting as of March 31, 2024. In making this assessment, management used the criteria set forth
in the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).
 
Based on the assessment using those criteria,
management concluded that, as of March 31, 2023, our internal control over financial reporting was not effective due to certain material
control weaknesses, including:
 

-We failed to maintain effective controls over period-end
financial reporting, specifically related to income taxes and the reconciliation of account level balances that resulted in errors; and

 

-There were ineffective information technology general controls
in the areas of privileged user access and the review of user access over certain information technology systems that support our financial
reporting processes.

 
Remedial actions have then been implemented to
address some of the issues. However, in the assessment in fiscal 2024, the management still concluded that, as of March 31, 2024, our
internal control over financial reporting was not effective due to certain material control weaknesses particularly that we failed to
maintain effective controls over period-end financial reporting related to income taxes and the reconciliation of account level balances
that resulted in errors.
 
The Company plans to put in more resources to
strengthen the internal control environment and will enhance the communication with external consultants who are assisting the Company
in taxation and management information systems. Details of implementation will be provided in the quarterly report on Form 10-Q for the
quarter ending June 30, 2024.
 
Attestation report of the registered public
accounting firm
 
This Annual Report on Form 10-K does not include
an attestation report of our registered public accounting firm due to an exemption for “non-accelerated filers.”
 
Changes in internal control over financial
reporting
 
There were no changes in our internal control
over financial reporting (as the term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March
31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
Item 9B. Other Information.
 
During the three months ended March 31, 2024,
no director or officer of the Company adopted, modified, or terminated a “Rule 10b5-1 trading agreement; or a “non-Rule 10b5-1
trading agreement’ as each term is defined in Item 408(a) of Regulation S-K.
 
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections.
 
Not Applicable.
 


27
 

 
PART III
 
Item 10. Directors, Executive Officers and Corporate Governance.
 
In response to this Item, the information set
forth in our Proxy Statement for our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”) to be filed within 120
days following the end of our fiscal year, under the headings “Proposal No. 1—Election of Directors,” “Our Executive
Officers,” “Section 16(a) Compliance,” and “Corporate Governance Practices and Policies” is incorporated
herein by reference.
 
Item 11. Executive Compensation.
 
In response to this Item, the information set
forth in the 2024 Proxy Statement under the headings “Executive Compensation” and “Corporate Governance Practices and
Policies” is incorporated herein by reference.
 
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
 
The following table provides information regarding
shares outstanding and available for issuance under our existing equity compensation plans as of June 8, 2024.
 
Equity Compensation Plan Information
 


  
(a)  
(b)  
(c) 

Plan Category 
Number of
 securities to
 be issued
 upon
 exercise of outstanding options, warrants and rights  
Weighted-
average
 exercise
 price of
 outstanding
options, 
warrants 
and rights  
Number of
 securities
 remaining
 available for
 future
 issuance
 under equity
 compensation
 plans
 (excluding
 securities
 reflected in
 column (a)) 

Equity compensation plans approved by security holders 
 150,000  
$6.25  
 114,110 

Equity compensation plans not approved by security holders 
 -  
$-  
 - 

Total 
 150,000  
$6.25  
 114,110 

 
For additional information concerning our equity
compensation plans, see the discussion in “Note 10—Stock-Based Compensation.”
 
The remainder of the information required by this
Item is set forth in the 2024 Proxy Statement under the headings “Executive Compensation—Equity Compensation Plan Information”
and “Security Ownership of Certain Beneficial Owners and Management” and is hereby incorporated herein by reference.
 
Item 13. Certain Relationships and Related Transactions, and Director
Independence.
 
In response to this Item, the information set
forth in the 2024 Proxy Statement under the headings “Certain Relationships and Related Party Transactions” and “Corporate
Governance Practices and Policies—Board and Committee Independence” is incorporated herein by reference.
 
Item 14. Principal Accounting Fees and Services.
 
In response to this Item, the information set
forth in the 2024 Proxy Statement under the heading “Proposal No. 2—Ratification of Appointment of Independent Registered
Public Accounting Firm—Matters Relating to the Independent Registered Public Accounting Firm” is incorporated herein by reference.
 


28
 

 
PART IV
 
Item 15. Exhibit and Financial Statement Schedules
 
(a) Financial Statements
 
We have filed the financial statements in Item
8. Financial Statements and Supplementary Data as a part of this Annual Report on Form 10-K.
 
(b) Exhibits
 
The following is a list of all exhibits filed
or incorporated by reference as part of this Annual Report on Form 10-K.
 


Exhibit
Number
 
Description
 
Location

 
 
 
 
 

3.1
 
Amended and Restated Certificate of Incorporation
 
Incorporated herein by reference to Exhibit 3.1 to the Post-Effective Amendment No. 1 to Form S-1, filed with the SEC on September 19, 2018

 
 
 
 
 

3.2
 
Amended and Restated Bylaws
 
Incorporated herein by reference to Exhibit 3.1 to the Form 8-K, filed with the SEC on July 24, 2019

 
 
 
 
 

4.1
 
Specimen Certificate for Common Stock
 
Incorporated herein by reference to Exhibit 4.1 to the Form S-1, filed with the SEC on June 27, 2017

 
 
 
 
 

4.2
 
Description of Securities
 
Incorporated herein by reference to Exhibit 4.1 to the Form 10-K, filed with the SEC on June 28, 2019

 
 
 
 
 

10.1+
 
Unified Work Contract for Migrant Workers, dated May 1, 2023, by and between Jerash Garments and Fashions Manufacturing Company Limited and Wei Yang
 
Incorporated herein by reference to Exhibit 10.1 to the Annual Report on Form 10-K, filed with the SEC on June 28, 2023

 
 
 
 
 

10.2+
 
Consulting Agreement, dated January 12, 2018, by and between Treasure Success and Yukwise Limited
 
Incorporated herein by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on January 16, 2018

 
 
 
 
 

10.3+
 
Consulting Agreement, dated January 16, 2018, by and between Treasure Success and Multi-Glory Corporation Ltd.
 
Incorporated herein by reference to Exhibit 10.18 to the Form S-1, filed with the SEC on January 18, 2018

 
 
 
 
 

10.4+
 
Amended and Restated 2018 Stock Incentive Plan
 
Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on September 19, 2019

 
 
 
 
 

10.5+
 
Form of Option Award Notice and Agreement (Employee)
 
Incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the SEC on March 23, 2018

 
 
 
 
 

10.6+
 
Form of Option Award Notice and Agreement (Consultant)
 
Incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the SEC on March 23, 2018

 
 
 
 
 

10.7+
 
Employment Agreement dated November 27, 2019 by and between Jerash Holdings and Gilbert K. Lee
 
Incorporated herein by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on December 2, 2019

 
 
 
 
 

10.8
 
Director Offer Letter dated June 15, 2020 by and between Jerash Holdings and Bill Korn
 
Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on June 15, 2020

 
 
 
 
 

10.9+
 
Option Award Agreement dated November 27, 2019 by and between Jerash Holdings and Gilbert K. Lee
 
Incorporated herein by reference to Exhibit 10.2 to the Form 8-K, filed with the SEC on December 2, 2019

 
 
 
 
 

10.10+
 
Form of Indemnification Agreement
 
Incorporated herein by reference to Exhibit 10.2 to the Form 8-K, filed with the SEC on June 15, 2020

 


29
 

 


10.11
 
Factory Lease Agreement dated January 1, 2021 between Jiangmen Treasure Success and Guangdong Huadian Technology Industry Co., Ltd.
 
Incorporated herein by reference to Exhibit 10.20 to the Annual Report on Form 10-K, filed with the SEC on June 23, 2021

 
 
 
 
 

10.12+
 
Letter of Employment dated April 22, 2022 between Treasure Success and Choi Lin Hung
 
Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on April 28, 2022

 
 
 
 
 

10.13+
 
Letter of Employment dated April 22, 2022 between Treasure Success and Ng Tsze Lun
 
Incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the SEC on April 28, 2022

 
 
 
 
 

10.14
 
Facility Letter dated January 12, 2022 by and between Treasure Success and DBS Bank (Hong Kong) Limited
 
Incorporated herein by reference to Exhibit 10.18 to the Annual Report on Form 10-K, filed with the SEC on June 27, 2022

 
 
 
 
 

10.15
 
Purchase and Sale Agreement dated June 22, 2022 by and between Treasure Success and Wong Bing Lun and Chow Lai Ming
 
Incorporated herein by reference to Exhibit 10.19 to the Annual Report on Form 10-K, filed with the SEC on June 27, 2022

 
 
 
 
 

10.16
 
Joint Venture and Shareholder’s Agreement dated March 20, 2023 by and between Treasure Success and P.T. Eratex
 
Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on March 21, 2023

 
 
 
 
 

10.17
 
The Shareholders’ Agreement dated October 10, 2023 by and between Treasure Success and Newtech Textile (HK) Limited
 
Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on October 12, 2023

 
 
 
 
 

10.18
 
Banking Facilities dated January 4, 2024, by and between Treasure Success and DBSHK
 
Incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the SEC on February 8, 2024

 
 
 
 
 

14.1
 
Code of Ethics
 
Incorporated herein by reference to Exhibit 14.1 to the Annual Report on Form 10-K, filed with the SEC on June 29, 2020

 
 
 
 
 

19.1
 
Insider Trading Policy
 
Filed herewith

 
 
 
 
 

21.1
 
Subsidiaries of Jerash Holdings (US), Inc.
 
Filed herewith

 
 
 
 
 

23.1
 
Consent of Marcum LLP
 
Filed herewith

 
 
 
 
 

31.1
 
Certification of Principal Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
 
Filed herewith

 
 
 
 
 

31.2
 
Certification of Principal Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
 
Filed herewith

 
 
 
 
 

32.1*
 
Certification of Principal Executive Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Furnished herewith

 
 
 
 
 

32.2*
 
Certification of Principal Financial Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Furnished herewith

 
 
 
 
 

97.1
 
Compensation Recovery Policy
 
Filed herewith

 
 
 
 
 

101.INS
 
Inline XBRL Instance Document
 
Filed herewith

 
 
 
 
 

101.SCH
 
Inline XBRL Taxonomy Extension Schema Document
 
Filed herewith

 
 
 
 
 

101.CAL
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document
 
Filed herewith

 
 
 
 
 

101.DEF
 
Inline XBRL Taxonomy Extension Definition Linkbase Document
 
Filed herewith

 
 
 
 
 

101.LAB
 
Inline XBRL Taxonomy Extension Label Linkbase Document
 
Filed herewith

 
 
 
 
 

101.PRE
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document
 
Filed herewith

 
 
 
 
 

104
 
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 
Filed herewith

 


+
Indicates a management contract or compensatory plan, contract, or arrangement.

 


*
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-K and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.

 
Item 16. Form 10-K Summary.
 
None.
 


30
 

 
SIGNATURES
 
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 


 
JERASH HOLDINGS (US), INC.

 
 
 

Date: June 28, 2024
By:
/s/ Gilbert K. Lee

 
Name: 
Gilbert K. Lee

 
Title:
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated below on June 28,
2024.
 


Signature
 
Title

 
 
 

/s/ Choi Lin Hung
 
Chairman, Chief Executive Officer, President and Treasurer

Choi Lin Hung
 
(Principal Executive Officer)

 
 
 

/s/ Gilbert K. Lee
 
Chief Financial Officer (Principal Financial Officer and

Gilbert K. Lee
 
Principal Accounting Officer)

 
 
 

/s/ Wei Yang
 
Vice President, Secretary, and Director

Wei Yang
 
 

 
 
 

/s/ Bill Korn
 
Director

Bill Korn
 
 

 
 
 

/s/ Ibrahim H. Saif
 
Director

Ibrahim H. Saif
 
 

 
 
 

/s/ Mak Chi Yan
 
Director

Mak Chi Yan
 
 

 
 
31
 
















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